Amazon 2.0 : Private Labels!


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A recent report by Recode.net suggests that Amazon will soon start selling its own brand of snacks, diapers and detergents. And it is just a matter of time when Amazon Prime members will exclusively get the first taste of Amazon’s brands like Happy Belly and Mama Bear. And prima facie, this move by Amazon can not to be taken lightly by any of those companies who are going to turn into competitors of Amazon pretty soon.

Two factors which actually intensifies the situation are – a) The increasing penetration of online buying for daily needs across the globe; and b) The impressive reach of Amazon in the major markets, including more than 50% of US e-commerce market. This move is sure going to be a trend-changer, or a trend  maker.

While it might not be anything new for a company to adopt Private Label route to increase its effectiveness in the market, the timing of doing so is what makes the whole difference and brings the impact. In past, we have seen companies adopt this route to cut costs, or increase its profitability, or to eliminate their dependence on specific brands. But how many times have you seen a company adopt private label route to establish an increased ‘dominance’ in the market? Probably none so far. I have little or absolutely no doubt that this move by Amazon is certainly going to impact the revenues of several companies, including the ones who are selling on Amazon platform since years. And this also enables Amazon, at least theoretically, to expand its presence beyond the online arena and compete with these consumer brands on their home turf – the offline retail.

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Having shared my thoughts on the Amazon’s masterstroke, a question which remains in my mind – Is it an ethical move? As a platform whose primary goal was to enable retailers/manufacturers sell anything and everything from a single outlet, wasn’t neutrality (towards all its sellers) the founding pillar of the business? Will owning a brand and selling it on the same platform not translate to conflict of interest? To me, it certainly appears like overriding the very founding principles on which the whole company flourished. And some repercussions will soon appear from different segments with-in the market segments.

What is most interesting is that now, it is going to become de-facto strategy for most of the marketplaces across the world (including Indian e-commerce marketplaces) to adopt and promote private label items on their platform to meet the profitability and penetration targets. Like, I can imagine Flipkart racing towards its own line of Fashion & Accessories brands (apart from what it already owns at Myntra), or SnapDeal employing Chinese companies to manufacture SmartPhones for them. All this is bound to happen.

[As a side note, its not that Indian e-Commerce companies were not trying similar things earlier. They approached this problem by incubating suppliers like WS Retail, CloudTail etc. Which was another form of Private Label. However, the recent regulatory move by Government of India has restricted the role of such incubated private label sellers. However, now the chances are very high that private labels floated by these e-commerce biggies will open the floodgates.]

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But how will Amazon India benefit from it? Well, that depends on what Flipkart & SnapDeal (and others like ShopClues & Jabong) choose to do. Let’s say, all these home grown brands adopt the private label route and flood the market. In such a case, Amazon India will become a de-facto platform for selling those originally popular brands to Indian consumers, and hence making Amazon India attract a more price insensitive consumers, and hence lift the company towards profitability & dominance. [If they adopt private label route, Amazon India won’t take that route for sure.]

And what if the e-Commerce biggies of India do not take the the private label route and continue to operate as always? Amazon India will have to suppress its itch to adopt private labels in India, and continue playing its patient game while watching Flipkart & SnapDeal bleed every day.

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Is there anyone who remains unaffected by Amazon’s private label adoption strategy? Well yes, the Chinese e-Commerce companies. They were anyway playing the game behind the secured boundaries provided by the Chinese government. They will continue get ideas from Amazon to up their game in the domestic as well international markets, but remain absolutely unaffected when it comes to serving those 1.3 billion consumer at home.

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Juggernaut: A Publishing experiment


Jauggernaut App Launch

If you have ever loved reading, you would sense the thrill and joy of seeing a new book. I still salivate at the very thought of reading a book. No wonder a time came in my life when I was carrying more books than clothes, utensils, and other stuff combined together. And for a nomad like me, it started to make sense to switch to a technology which saves this regular effort of carrying books from one place to other. And hence a point came in my life when I switched to Kindle, and so far its been a wonderful companion. No more hassles when I shift my house or travel for unknown number of days. My books travel with me 🙂

But is Amazon Kindle a success because of its light-weight, or long battery life, or e-ink technology? Isn’t all this a part of technology which everyone can replicate? There has to be something more than just technology. And this fact becomes even more evident when you realize the fact that companies like Sony tried to come up with e-readers long before we saw Kindle, and even to this date there are so many companies which are trying their fate in this new era of digital content selling and distribution, like Rakuten’s Kobo or Barnes & Noble’s Nook, these all companies have not got the use acceptance they aspired for. And the reason for their lower acceptance rate vary from low range of books available in their bookstore, to the high price of their devices, to the poor partnerships by publishers to exclusively tie-up with them.

And while all this competition among eBook readers was on, we got a new creature to deal with – The SmartPhone, which claimed to replace all other screens in our lives. And to a great extent it has been really successful in replacing every other screen from our lives. So how did the digital publishing industry survive? Instead of fighting the SmartPhone screen, they got friendlier with them – they created Apps which could replicate the experience of their eBook reading experience on their devices, while keeping everything in the background same. Still the game didn’t change – Amazon still controls the largest share of the market for one simple reason – It has the largest content repository and is most accessible buying platform for the whole world.

So how can someone make a place for itself in such a market? I am sure someone must have asked this question while thinking of starting a Publishing company like Juggernaut. When I heard about this company I was immediately interested in learning what these guys are trying to do, and how. I learnt that this company has been started by Chiki Sarkar who has been associated with publishing industry. The company is headed by Durga Raghunath, who has been in Digital Media and Publishing for over a decade now. And to top it all, they have by now acquired a set of high profile people and writers to contribute to this project. I am sure there is something great cooking here 🙂

Their business model orbits around the core idea of making content readable on mobile devices and distributing it among the  contemporary youth and other readers whose tastes are fast changing.

In past many months I have been receiving a weekly newsletters from them which speaks a lot about the quality and variety they are trying to offer. I am indeed pleased that a modern day publishing company from India is trying its best to develop a great network of content creators,  distribution channel by leveraging technology, and aiming at audience who can easily afford this content. I am sure there is some great innings about to start with this publishing company’s App which is due for release on 23rd April 2016.

I am willing to see how quickly they can churn out engaging content and how soon they master the art of creating something for everyone. I am absolutely hopeful that these guys are on the verge of creating a history in Indian publishing.

Juggernaut, I am with you in this brave experiment you have taken up. Bring it on, I will excuse my Kindle for the sake of empowering this Indian experiment.