Amazon announced last week that it will soon begin selling private label tea (along with gourmet coffee, nuts, spices, baby food and vitamins) and even some perishables.
The products, marketed under the Happy Belly brand name, are exclusive to Amazon Prime members for now. Prime members pay $99 annually for expedited shipping and other perks. The announcement follows a major expansion of Amazon’s expansive distribution system.
Offering speedy delivery of grocery and household items could undercut brick-and-mortar retailers, reports Money. “The move could give Amazon an even bigger edge over competitors. Retail growth is increasingly shifting online, where Amazon alone accounts for half of all sales growth online,” according to the article.
USA Today notes that Amazon has an even bigger incentive than Target and Wal-Mart did when they expanded into private-label products over a decade ago: Millennials.
The newspaper quotes Phil Lempert, a Los Angeles-based consumer analyst: “The generation that’s grown up with the Internet has shown more loyalty to distributors — say flight-and hotel-aggregator Kayak.com or delivery services Uber Eats — than the end brand that provides the good or service,” said Lempert. “Millennials care about quality and price and taste; they’re brand agnostic. It’s a sweet spot for Amazon,” he said.
Search Amazon for “tea” in the gourmet food section and an astounding number of products appear – 115,093 to be exact.
Shop the tea category and you will see daunting numbers of tea: Black (17,929), rooibos (664), oolong (1,124), white (900), tea samplers (26,520), herbal (45,054), green (7,243), bottled iced tea (922), chai (1,168) not to mention Fairtrade, medicinal tea and tea powders (matcha), detox and dandelion, tea bags, tins, sachets and 705 different teas in single-serve capsules.
Click on oolong, a style of tea that represents less than 2% of all the tea produced in the world, and Amazon displays 1,124 varieties on offer. How to choose? Amazon has that well in hand. Visitors to the site can select from: “Best sellers” or “Top Rated” or “Most Wished for Tea” or follow their leader and select the “Most Gifted Tea” where the top 100 teas selected for gifting are named.
US sales of private label products reached $118.4 billion last year, up $2.2 billion, according to the Private Label Manufacturers Association. Developing private label goods “could give Amazon—which has an extensive trove of customer data—the chance to create and test exclusive new offerings ahead of the competition,” according to Money.
Source: Amazon.com, USA Today