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Amazon Basics


 A lot of Amazon’s crazy ideas get the most publicity. From warehouses in the sky to no checkout supermarkets, their innovations are often talked about to a great extent. One area that has not been covered as much recently is Amazon Basics; Amazon’s growing line of everyday consumer products. The line was initially launched in 2009, so it is not breaking news, but recently it has been evolving to a much more expansive product base and their platform gives them the unmatched ability to push their product on the consumer.

When a person walks into Walmart and they are looking to buy a backpack, they will go to the shelves and peruse the various backpacks looking for a familiar name. Walmart’s generic backpack may be featured among them, perhaps having a favorable position to the isle, but generally the name brands that sell there do not want to be overpowered. Amazon does not have this problem.

Through the nature of their website, Amazon knows immediately what you are looking for when you type it in and therefore can immediately push their product as your first choice. Their brand is front and center and often the lowest price. There is no need to browse the various offerings because Amazon has what you need right there, and so you buy. Another advantage they have is the ability to promptly collect data on which products are selling the best. Once a product is identified, they can quickly launch their generic version and push out the seller.

There is essentially no limit to the vastness of their product offerings. If they can identify a target product, they can get the sale. Depending on how aggressively they push Basics, it could serve to consolidate their seller base, and generate more top-line growth going forward. I doubt that Amazon Basics generates a higher margin than a pure commission sale, but it certainly generates a far greater amount of revenue per item.


In the end the effect is that Amazon Basics covers high volume, relatively low cost items. Previously, Amazon would make a small amount when each item was sold by an independent seller. Amazon Basics allows them to recognize the full item value as revenue, potentially boosting top line growth to appease investors while sacrificing gross margin. In the long run, the tactics may prove more profitable, but currently they could give a false sense of growth.

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