Amazon has been cutting back on its nearly 250,000 Amazon Basics everyday private-label offerings, which generate a mere 1% of its $469.8 billion in annual sales, the Wall Street Journal reports.
Amazon founder Jeff Bezos had set a target for Amazon Basics—45 various house brands ranging from cables to vitamins to clothing and furniture—to account for 10% of the company’s sales by 2022.
Over the past six months, executives have given the order to halve Amazon Basics offerings, primarily by not reordering much of the stock.
The global online and retail behemoth is also considering exiting the business entirely, possibly offering the move as a concession to antitrust regulators, or in the event of a lawsuit.
The direction reportedly came from Dave Clark, Amazon’s longtime head of global consumer business, who recently left the company to become CEO of Flexport, effective Sept. 1, 2022.
Consumer protection officials have been concerned by how Amazon competes with small- and medium-sized retailers on its platform and, according to the WSJ, how it analyzes nonpublic information it gathers on its nearly 2 million retail customers’ sales to copy their goods and services and compete with them.
In testimony to Congress in 2020 on Amazon’s use of its sales data to compete with its business customers, then-CEO Bezos said, “I can’t guarantee you that policy has never been violated.”
In April of this year, the Securities and Exchange Commission began examining Amazon’s business practices disclosure, and the Federal Trade Commission has also been looking into Amazon’s competitive practices.
After WSJ published its story on Amazon cutting its private-label business, Amazon issued a statement saying, “We never seriously considered closing our private-label business, and we continue to invest in this area, just as many retail competitors have done for decades and continue to do today.”
Amazon declined to comment on WSJ’s follow-up question about information the paper gathered from sources on Amazon Basics’ disappointing sales.
Amazon Basics is similar to Target Corp.’s “Up & Up” and Walmart’s “Great Value” brands.
Sources say Amazon’s new strategy for Amazon Basics is to pare its 243,000 products back to only the best-selling items, such as cables, and to stop offering a plethora of less popular goods that sit idly in its warehouses.