Private-Label Advertising in Competitor Listings; New Ad-Supported Video Service

RetailTechNews’ weekly roundup brings you up-to-date research findings from around the world. In this week’s edition: Private-Label Advertising in Competitor Listings; New Ad-Supported Video Service; and The Four-Star Store.

Private-Label Advertising in Competitor Listings

Amazon‘s latest experiment to promote its own products is taking place inside the listings of competitor brands.

When searching for various products in beauty, health, household, and baby items, some shoppers have seen the link ‘Similar item from Our Brands’ show up at the bottom of the listing. Clicking on the link, which is not an advertisement, takes you to the product page for Amazon’s own private-label offering.

The new feature illustrates the growing tension between Amazon and the many big and small brands that have become reliant on the site because of its dominance in e-commerce. Amazon is becoming a direct competitor for more sellers, raising questions around how the company’s use of its marketplace sales data could potentially give it an unfair advantage over other brands and merchants.

Amazon has significantly increased the number of private-label brands in recent years, and currently has over 120 of them, according to a new report published by TJI Research last week. That’s more than a nine-fold increase since early 2016. Amazon’s private-label business expects to generate USD$7.5bn (£5.8bn) in sales in 2018 and USD$25bn (£19bn) by 2022.

It is this sort of behaviour that is causing many merchants and brands to consider their relationship with Amazon. Though most come to the conclusion that they cannot completely sever ties with the e-commerce giant, many are looking for ways to become more reliant on their direct-to-consumer sales, selling through their websites and apps.

New Ad-Supported Video Service

Amazon subsidiary IMDb is expected to announce this week a free, ad-supported video service for Amazon Fire TV users, according to several people with knowledge about the matter. The new service, which will be similar to The Roku Channel, or some parts of Hulu, will feature TV shows and movies. It will be available to all Fire TV users, not just Amazon Prime Video users.

The move could help Amazon capture revenue from the lucrative TV advertising market, which is expected to generate almost USD$70bn (£54bn) in revenue in the U.S. this year, according to eMarketer.

On the new service, advertisements can appear between content and marketers will be able to wrap ads around an embedded video ‘player’, similar to the experience on many websites. Amazon already allows commercials on content on Fire TV apps, but this would vastly expand the offering and allow for more insights from Amazon’s massive user base.

To lure more brands, Amazon will allow marketers access to its proprietary data to help target video advertising for the first time on Fire TV, one agency executive said.

The Four-Star Store

Amazon is letting its customer ratings do the talking at its new store. Called ‘Amazon 4-Star’, the new concept will stock items that customers have rated four stars or above, on average, according to a blog post announcing the store. That means it will include only the best of the best; Amazon says the current assortment averages 4.4 stars.

The product assortment will vary widely, from Amazon’s own devices and other consumer electronics to kitchen and home products, and from toys and games to books, Amazon’s original focus. Amazon says it will use data from sales and customer wish lists to display trending or most-wished-for items.

At Amazon 4-star, digital price tags will show both the full price and the Amazon.com price, which can frequently change based on Amazon’s pricing algorithm.

It is clear that promoting private-label brands is a business area of focus for Amazon. Combined with the news that they are promoting private-label products within listings for competitive brands, also selling them through these 4-star stores will allow them to build customer loyalty towards their products.