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Amazon.com, Inc. (NASDAQ:AMZN) Ventures into Perishable Foods

Amazon.com Inc (NASAQ:AMZN) Brick and Mortor Stores

Looks like Amazon.com, Inc. will be selling its own brand of baby food, nuts and diapers, among other products. This also marks the first time it is dabbling in the sale of perishable foods.

Amazon.com Inc (NASAQ:AMZN) Brick and Mortor Stores

According to Wall Street Journal, the new brands will be named Wickedly Prime, Mama Bear and Happy Belly. Besides nuts, diapers and baby foods, other items in the portfolio include coffee, spices, vitamins and tea. Other household items such as laundry detergents and diapers are also included.

The items will only be sold to its Amazon Prime subscribers. The first brands will be available by the end of this month or in early June.

Service Announced A Week After Launch of Amazon Video Direct

The move comes just after the launch of Amazon Video Direct last week. The service, which aspires to outdo Alphabet Inc.’s YouTube, allows users to post videos and make money through royalties.

Amazon has been thinking of creating its own private-label product line for many years. It has consulted widely with manufacturers such as TreeHouse Foods Inc., and also met branding consultants.

Amazon’s idea isn’t a novel one. Consumers have grown accustomed to private label brands sold by retailers such as Dean & DeLuca and Wal-Mart Stores Inc. Most of these in-house brands are often perceived as being of higher quality than their peers.

The Private Label Manufacturers Association notes private brands sold $118.4bn worth of goods in 2015 in the U.S. This is an increase of $2.2bn from the previous year. Amazon wants a slice of this market, albeit by retailing in niche products that have markedly high profit margins. The venture also helps it build its own capacity to develop new products before its vendors do.

Private-label goods tend to have higher profit margins compared to name brands as their parent companies incur minimal if no brand development and marketing costs. Amazon stands to gain a lot from its superior data analytics capabilities, which will help determine which product is likely to be popular.

The private-label products will be sold to Prime subscribers, which provides an ideal platform for rapid growth.

For many years, Amazon has always introduced new private labels such as its Elements baby wipes and Pinzon towels and linens. The AmazonBasics product range includes several items such as computer mice, cell phone cases, dog grates and dumbbells. It recently launched a fashion line featuring North Eleven scarves and Lark & Ro dresses.

Discontinued due to Design Flaws

However, Amazon discontinued its Elements line a few weeks after launching it in late 2014, citing poor design. It also stopped selling a cookware and tool line that was endorsed by a renown chef.

The Happy Belly line will cover foodstuffs such as cooking oil, tea, coffee, nuts and trail mix. Snacks foods will be sold under the Wickedly Prime label.

Though the full product lineup remains unknown, Amazon has applied for trademark rights for foods such as potato chips, granola and chocolate. Air deodorizers and razors are also included.

The Presto! Label will deal in household items such as laundry detergent, while the Mama Bear brand will deal in baby-food jars, diapers and soft detergents. How Amazon plans to price its goods relative to competing brands remains unclear.

Amazon will have to select its food manufacturers carefully, with an eye on quality controls. This is mainly due to the fact that any recalls of food products will ruin its reputation.

Amazon has always sold its Elements private brand via Prime after its release in late 2014. Despite this, Elements wipes account for 9 percent of all baby wipes sold on Amazon.com, data from research firm One Click Retail shows. Amazon has at least 50 million subscribers on Prime.

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