Amazon’s Private Label Sales Could Reach $25B

With SunTrust Robinson Humphrey projecting that Amazon’s private label business could see revenues of $25 billion by 2022, SunTrust analyst Youssef Squali said the venture could send shares up more than 21 percent over the next year. As a result, he increased his price target from $1,900 to $2,000 a share, CNBC reported.

“As strong an eCommerce platform as Amazon has become over the last 20 years, we believe that the best has yet to come,” Squali wrote in a note on Monday (June 4). “Private label is one of the highly under appreciated trends within Amazon, in our view, which over time should give the company a strong … competitive advantage.”

In terms of clothing and footwear on Amazon, the eCommerce retailer’s own private labels are the fourth most purchased brand, “with only Nike, Under Armour and Hanes ranking higher,” Squali wrote in a note. Overall, the bank projected that private label sales could bring in $7.5 billion in sales on the company’s site this year.

In 2017, an analyst from financial firm Morgan Stanley predicted the eCommerce platform’s private label retail sales could provide an added boost to its bottom lines. Brian Nowak said Amazon’s private label merchandise sales could add $1 billion to Amazon’s bottom line, making up 5 percent of retail sales by 2019, Barron’s reported in October.

“… for Amazon, it’s all about gross profit dollars: advertising, subscriptions, services … and now private label …” Nowak said. “We believe it is increasingly important to focus on Amazon’s gross profit dollar drivers. A deepening gross profit pool gives Amazon more dollars to invest and [eventually] allows [funds] to flow down to P&L for shareholders.”

Amazon’s private label goods first launched in 2009 and include thousands of products in a wide range of categories, such as clothing, electronics, industrial supplies and more, Barron’s reported. As of 2107, Amazon boasted more than 30 private label brands in nine categories.