Amazon has released its own line of two particular products that may have some of its sellers crying foul: diapers and baby wipes.
As a recode.net article points out, anti-Amazoners have said it would only be a matter of time before the e-Commerce company used the very platform it built to support merchants to compete against them. That time has come as the company’s line — dubbed Amazon Elements — of diapers and baby wipes will be available to Amazon Prime members. That’s the other key component to this move: more membership perks. Plus, they’re able to undercut the competition.
“By working directly with a manufacturer, Amazon will be able to price the brand aggressively, with a 40-count package of diapers starting at $7.99. That works out to about 19 cents a diaper, compared to competitor prices that mostly range from 24 cents to 34 cents,” Jason Del Ray wrote in the article. “As a result, some people will view the launch as a shot across the bow at the big diaper brands, Huggies and Pampers, that sell their products on Amazon.”
Amazon’s attempt to build relationships with suppliers to offer their own line at a cheaper rate is consistent with the company’s direction of getting more hands on with products. The diaper and wipes line will also include information about what materials are in them and where they are made. That’s another move for Amazon keep its edge in the baby supply industry where parents becoming more insistent on knowing what their baby’s products are make from.
But some investors may still wonder? Why diapers? It appears Amazon has been setting up this move for a while. It’s a year after began reaching out to people to create its own category of consumables, Del Ray reported.
“Private-label brands such as Elements can allow retailers to keep prices low since there is no intermediary between itself and the manufacturer. For Amazon, it can help it boost margins on a product that is ordered with high frequency, or simply add a quality product at a price point others will be hard pressed to match,” he wrote. “Grocer Trader Joe’s has built an entire business on private labeling; Target and Costco also own successful private-label brands — including their own lines of baby diapers.”
Amazon recently raised its membership fees from $79 to $99, which also came with a bundle of new perks like free shipping and free dreaming and media downloads, and the decision to make family-focused products is a direct target at some of its most popular consumers. Amazon has other product brands, but the point of adding diapers and wipes is two-fold. Gain more customers and turning those customers into members. Amazon may be face challenges with its new line though.
“While Prime is popular with families with young children, the introduction of an Amazon-branded product does not guarantee success,” Del Ray wrote. “It will also be difficult to convince parents to switch if they already buy a brand that keeps their kids dry and happy.”
Amazon confirmed with the author that the diaper and wipe line will remain with a member-only option, giving them the allure of exclusivity and thereby adding value to memberships. The next question: How will sellers like Huggies and Pampers respond?