In a bid to strengthen footprint further in the e-commerce world, Amazon (AMZN - Free Report) is aggressively looking into expanding product portfolio with the help of its home brand items.
The company recently rolled out Amazon Accelerator Program in an effort to bolster its private label business. Notably, new own brand products on its online retail platform will expand the product choices for the customers, consequently enhancing its key offerings.
This will enable the company in attracting new customers while retaining its existing customers. Consequently, this is likely to strengthen the company’s customer base which in turn will drive its top-line growth.
Coming to the price performance, shares of Amazon have returned 59.4% on a year-to-date basis, outperforming the industry’s rally of 11.4%.
Booming Private Label Business
Amazon is leaving no stone unturned to bolster its private label business and this is evident from the its latest move.
With the new program, Amazon is trying to bring various companies and manufacturers under its program and make them part of its “Our Brands”.
Notably, Amazon has created job openings to run its private label business efficiently. Moreover, it has created job opportunities for several manufactures to create products which will fit into its huge Private Brands product family. In fact, with this accelerator program, the e-commerce giant is bringing social benefits.
Currently, its private label product portfolio comprises of more than 120 products across kitchen goods, batteries, clothing and electronics accessories categories. Notably, the number has surged by more than nine-fold since 2016.
Recently, the company rolled out its first ever AmazonBasics foam mattress which falls under the category of bed-in-box mattress.
We believe an expanding product portfolio on the back of home brands will help Amazon to transform its private label business into a profit generating one.
According to SunTrust Robinson Humphrey, this business of Amazon is expected to generate $7.5 billion of sales in 2018 and reach $25 billion by 2022.
Strengthening Retail Position
The above mentioned strong endeavors will aid Amazon to deliver enhanced shopping experience on its vast e-commerce platform. This will boost its position in the core retail as well as online retail space further.
Moreover, the company’s strong private label business initiatives will aid it in fortifying its competitive position against the likes of Walmart (WMT - Free Report) , The Kroger (KR - Free Report) and Target (TGT - Free Report) .
Notably, these three big retailers are trying to enhance presence in private brands business. Walmart has a huge portfolio of own brand products.
Further, Target has recently unveiled its house brand called Smartly for consumer goods like dish soap, body lotion, paper towels, toilet papers and many more.
Nevertheless, Amazon’s new program will be pivotal in shaping its private brands business. Moreover, its robust product portfolio along with its various customer friendly offers and loyalty programs will continue to aid its retail initiatives.
Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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