Blog
Oct 8, 2018

Premium Positioning: Private Label on Prime Pantry's Digital Shelf

Store Shelf Blog
A recent study from Numerator, leveraging the InfoScout OmniPanel, found that 100% of households buy private label, and the average household is spending $1,200 annually on private label. In turn, we have witnessed an explosion of private label from grocers, mass merchants, and drug stores to try and seize the growing opportunity. Not only have they developed private label offerings in new categories, but they’ve also introduced different tiers of private brands within categories—spanning from bottom to top shelf—to meet the needs of different shoppers.

Retailers aren’t relying on shoppers to find private brands on their own, either. Data from Numerator showed that, in 2017, private label products accounted for 16% of weekly circular promotions. That share was much higher for certain private label-forward retailers like Aldi (72%), Save-A-Lot (43%), or Harris Teeter (28%). Retailers are actively supporting their store brands with marketing efforts to both build awareness of their brands, and to drive purchase over national brand options on their shelves.

Though private labels have made inroads against national brands at many retailers, a new threat has emerged that could hurt retailers like Aldi and Save-A-Lot in their efforts to grow their store brands. Surprise, surprise, that threat is coming from Amazon.

The homepage has turned into the modern storefront. Shoppers can visit a site like Amazon and find advertising, promotions, and other compelling reasons to stick around on the site to make a purchase, much like a brick and mortar storefront might use circular ads, in-store displays, or a samples table in the same way. And if the homepage is the modern storefront, then search results pages have turned into the modern store shelves. How prominently a brand is featured on these digital shelves largely determines whether or not an online shopper will pick their product. An analysis of Amazon’s digital shelves, conducted by Numerator, revealed that Amazon is featuring their own private labels even more prominently than many brick and mortar retailers.                                                                                                                                                       

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Source: Amazon Prime Pantry, Search Term "Hand Soap, First Row Search Results

Numerator’s study analyzed the first row of search results for 50 unbranded search terms spanning food/drink, home consumables, personal care, and pet categories on Amazon (Note: the “first row of search results” include both sponsored and organic search results). The study found that 18% of first row search results were for Amazon or Whole Foods private brands, slightly higher than 16% print circular share allocated to private labels across US grocery, mass, and drug stores. Across all 50 search terms, 90 unique brands appeared in the results. Amazon and/or Whole Foods brands accounted for three of the top five brands appearing in the first row of results. Solimo, Amazon’s personal care brand, appeared in the first row of search results more than any other brand.

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Source: Numerator study of 50 unbranded searches on Amazon.com

When isolating consumables categories that are more commonly purchased online, Amazon/Whole Foods’ share grows much larger. Among first row results for personal care search terms, for example, 32% of listings were for Amazon or Whole Foods private brands. As shoppers grow more comfortable buying food and drinks online, it is safe to expect to see more Amazon and Whole Foods brands in premium listing positions, barring significant sponsorship investments from national brands.

What’s especially interesting about these findings is that many of the Amazon and Whole Foods brands appear as sponsored listings, ensuring their products are among the first shoppers see, regardless of conversion rates, ratings & reviews, price, and other factors that help people decide what to buy.

This is yet another reason grocery stores, mass merchants, and drug stores have to be assessing their omnichannel marketing and merchandising plans, and strategizing on how to grow in a world with Amazon. People are only growing more comfortable buying groceries and other consumables products online. Amazon is making sure that when they do, they are finding Amazon and Whole Foods brands right at the top of their search results.

Every time a shopper finds an Amazon product in the first row of their search, decides to try it, and discovers they love it, it is a threat to the growth of equivalent store brands everywhere else. And if there’s one thing Numerator’s study revealed about Amazon, it’s that they are taking steps to make it easier for people to find their brands when browsing their site.