Amazon Is Killing It: Plans To Compete With Myntra And Jabong With Its Private Label

Amazon, the US-based retail giant is all set to create its own brands realizing the booming fashion and lifestyle segment in India making it the first country to have Amazon’s private fashion labels. Amazon has captured a significant share in whole ecommerce industry but it has to catch up in fashion and lifestyle industry.

Rivals like Myntra and Jabong who already sell their own brands in the country. Amazon is said to be building a team for this purpose and is screening people from fashion retailers and has hired a few for same.  Having their own branding substantially increases the profit margin. The private brands create tie-ups with fashion designer which inturn lead higher margins as there is no brand equity outgo. Prices of these brands can go a little more to South as unlike national brands these don’t require promotion.

Jeff Bezos, CEO of Amazon said in few months back that he is ‘excited’ about the fashion business and more exciting frontiers are yet to come.

Accentuating the same, Nitin Chhabra, CEO at Ace Turtle which is an ecommerce consultancy firm said,”Private labels gives higher margins to retailers in the range of 55%-65 % compared to 35 %-40 % margins selling others’ brands. Private labels tend to be great differentiators for retailers and they can plug the gaps on what companies otherwise provides and what consumers are looking for.”

In US, Amazon has established private brands like Pinzon which sells towels, batteries, laptop bags among others.  Amazon hinted this development when it posted a vacancy on LinkedIn for the job of head of private brands.

The job description included,”This position is responsible for leading and managing the private label brands to maximise customer experience, sales and margin. The person who joins our team in this critical leadership position must share our passion and commitment to giving Indian customers high quality fashion products.”

Though amazon has shown immense growth in past month with more than $1Bn turnover within a year of its operations in India. However, the pre-existence of fashion ecommerce companies has hindered growth of Amazon in this category. Let’s see how introduction of private label will help it out.