Amazon just announced the launch of Amazon Elements, a new line of "premium, everyday essentials with transparent origins." On the surface, the announcement just sounds like Amazon is offering its own line of products, which so far includes diapers and baby wipes. On a strategic level, this is a pretty big move from the ecommerce giant.
Amazon Elements is being pitched as an ethical brand of products with transparency and an "unprecedented level of information" available about them to buyers. Such information includes when and where items were made, why each ingredient was included, where the ingredients were sourced, etc.
“Our obsession with customers and drive to continuously innovate on their behalf has led us to create Amazon Elements. The two things customers told us they want are premium products that meet their high standards, and access to information so they can make informed decisions, Amazon Elements offers both,” said Sunny Jain, Amazon.com Consumables Vice President. "We’ve leveraged our strengths in technology to bring customers an unprecedented level of information about these products, all with just the click of a button. We’re excited to offer Amazon Prime members added selection, beginning with diapers and baby wipes.”
It's that last part that represents one of the major points about Amazon Elements as a strategic move. The products are only available to Prime members, which studies have found spend twice as much at Amazon.com as non-Prime members.
The move isn't surprising by any means. Pretty much everything Amazon does anymore (at least when it comes to consumer-facing products) involves some kind of Prime perk. That's even the main selling point of Amazon's Fire phone. Amazon thinks it will get you to become a Prime member one way or another, whether that's through original television content or through diapers. It does not seem as though they'll stop until they've hooked just about everybody.
Jason Del Rey At Re/code describes the other major strategic element of Elements:
For years, Amazon naysayers have warned that the e-commerce giant’s ambition would drive it to compete ever more directly with the merchants who sell goods on Amazon’s popular online marketplace. On Wednesday, the company is introducing its own line of diapers and baby wipes, which will only raise these fears...By working directly with a manufacturer, Amazon will be able to price the brand aggressively, with a 40-count package of diapers starting at $7.99. That works out to about 19 cents a diaper, compared to competitor prices that mostly range from 24 cents to 34 cents.
As a result, some people will view the launch as a shot across the bow at the big diaper brands, Huggies and Pampers, that sell their products on Amazon. Sellers on Amazon already gripe that Amazon sells the same products as they do. Now it is building a direct relationship with a supplier that allows it to undercut some of its own partners in a more significant way.
It seems very likely that the Amazon Elements brand will grow to include more products, which will mean Amazon selling more and more items on its own. Given that Amazon is the place on the web where products almost have to be listed, this is no doubt a scary thought to a lot of product makers. As Del Rey points out, Amazon is already selling its own brand of other products including furniture, bedding, batteries, etc. With Elements, it's getting into the real essentials. Combined with its other grocery-selling initiatives (yes, that's plural), its new restaurant delivery service, its handymen for hire, and its increasing focus on getting products to consumers more quickly (even if by taxi), Amazon is very aggressively looking to be the one that provides you with everything you need. At least if you're a Prime member.
Google, by the way, considers Amazon its top competitor in search.
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