Quoted – Amazon offering Private Label Products – ECommerce Times

Amazon is raising hackles among some of its partner manufacturers by cutting out the middleman with its new AmazonBasics line of consumer electronics products. Amazon is attaching its own branding to inexpensive cables and blank DVDs at the moment, but it plans to expand the line of offerings soon.

Offering a private label is a smart move for any retailer, said Scott Testa, business professor with Cabrini College.

“Private-branded items generally have higher profit margins,” he told the E-Commerce Times, pointing to private label products from retailer Best Buy (NYSE: BBY) as an example.

Amazon has benefited from decades of watching as other brand names have outsourced the manufacturing process while maintaining control of the customer — Testa cited Dell (Nasdaq: DELL) as an example.

Amazon’s fundamental business model — as aggregator of other manufacturers’ products — may pose some challenges for the retailer.

“No manufacturer wants to see a retailer coming out with its own private label goods,” Testa explained. “It is the retailer who will have the best leverage with the clients.”

In the case of Amazon, that leverage is huge, he added. “For all intents and purposes, a retailer like Amazon is perfectly able to cut out the middle man and feel few ramifications.”

http://www.ecommercetimes.com/story/Amazon-Links-Its-Brand-Image-to-CE-Accessories-Line-68173.html?wlc=1253703004

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