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Amazon Makes Drastic Cuts to Private Label Business in Advance of Potential FTC Antitrust Probe

Amazon is drastically cutting back its number of private label brands.
(Photo credit: Ungureanu - stock.adobe.com)

Amazon is dropping dozens of its private label brands as it works to shore up profits and prepares for the potential of an antitrust lawsuit from the Federal Trade Commission (FTC), according to the Wall Street Journal

In July 2022, the company began scaling back its private label business following disappointing sales and scrutiny from lawmakers. Now the company has eliminated 27 of its 30 in-house clothing brands, including Lark & Ro, Daily Ritual and Goodthreads, and will also drop its private-label furniture brands Rivet and Stone & Beam, people familiar with the matter told WSJ. Some of the brands will remain on the site for the time being until the company sells off the remaining inventory, at which point the brands will be retired.

When the sell-off is completed, Amazon’s in-house apparel division will have just three brands: Amazon Essentials, Amazon Collection and Amazon Aware. The Amazon Basics label, for home goods and tech accessories, also will be sticking around. While WSJ couldn’t ascertain the exact number of private label brands being phased out across all categories, sources told the publication that the total number of house brands is now less than 20.

Matt Taddy, VP of Amazon Private Brands, said in a statement to WSJ that the company was focused on getting rid of products that “aren’t resonating with customers.

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“We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands — like Amazon Basics and Amazon Essentials — for great value with high-quality products at great price points,” Taddy added.

Amazon’s private label business had 243,000 products across 45 different house brands per a company disclosure in 2020. Still, the private label business only accounted for approximately 1% of Amazon’s total retail sales, according to the company, a far cry from the 10% that Founder and former CEO Jeff Bezos targeted when the private label business first launched.

In addition to disappointing sales, Amazon’s private labels also have repeatedly landed the company in hot water, primarily over claims that Amazon used data from its third-party sellers to develop competitive private label products. In 2019, the House Judiciary Committee investigated these claims, and in 2022 Amazon reached a settlement with the European Union (EU) in a probe involving the same concerns. In the EU settlement, Amazon agreed to refrain from using data relating to or derived from independent sellers’ activities on the marketplace in its own retail business, including for the sale and development of private label goods.

Now Amazon finds itself under intense FTC scrutiny as a long-expected antitrust lawsuit against the ecommerce behemoth looks to be nearing reality. Amazon is scheduled to meet with FTC regulators this week for what is often described as a “last rites” meeting in advance of a lawsuit being filed, according to The New York Times and other media outlets. If it comes to fruition, this would be the fourth major FTC lawsuit against Amazon under the purview of current FTC Chair Lina Kahn, who shot to fame in 2017 (prior to her 2021 appointment to the FTC) for an academic article titled Amazon’s Antitrust Paradox, which claimed that the company unfairly dominates huge swaths of the American economy.

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