Amazon sought trademark protection earlier this month for over two dozen categories, including soup, water, coffee, pasta, vitamins, dog food, and various household items. The company has also approached private-label food manufacturers in search of a partner. Included in the discussions was TreeHouse Foods, one of the largest private-label producers in the United States.
In expanding to grocery goods, Amazon is following in the footsteps of the big boxes that came before it; Walmart, Target, and CostCo have all launched private-label portfolios. The reason why the online retailer would want in on the the same market is clear: there’s a lot of money to be had. CostCo generated $15 billion in sales of its Kirkland brand, and one-third of Target’s $73 billion in sales came from its private label.
According to market researcher Information Resources, private-label products accounted for 18 percent of all money spent on packaged goods last year, generating over $120 billion.
Outside of the clear financial gain, Amazon also has the infrastructure in place to take advantage of the expanded line. The company’s Fresh grocery delivery service is now available in Seattle, San Francisco, San Diego, Los Angeles, Philadelphia and New York.
The new line of product could also play nice with Amazon’s Dash button, the tiny gadget that consumers can press to automatically re-order a product they regularly purchase.