From The Wall Street Journal:
Following the playbook of countless retailers, Amazon.com Inc. is preparing to broadly expand its fledgling lineup of private-label brands to include an array of grocery items such as milk, cereal, and baby food as well as household cleaners, people familiar with the matter said.
Amazon’s planned expansion in the private-label business mirrors a more traditional retail model where name-brand products are sold beside store-owned goods. Private labels have become a vital business for mass-market retailers, generating stronger margins and building loyalty with consumers who no longer view generic products as lower quality.
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Many of Amazon’s coming private-label products will be ingested, making quality-control a critical issue.
The Seattle retailer has long dabbled in private labels. Besides diapers and wipes, it has offered all customers batteries, USB cables, backpacks and even ceramic plates under the Basics label, noted for its spartan black-and-white color scheme. And Amazon sells patio furniture and linens under its Strathwood and Pinzon brands.
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“It makes a lot of sense for any retailer to get into private label,” said Eddie Yoon, a principal at brand consultancy The Cambridge Group. “Private label has a lot of room to grow in terms of sales and can attract a new value-focused customer.”
Mr. Yoon said that despite their lower price tags, private label merchandise tends to have higher margins than name-brand goods for both retailers and manufacturers because of savings on marketing and brand development.
Link to the rest at The Wall Street Journal (Link may expire) and thanks to Barb for the tip.