Amazon is reportedly ready to ramp up its battle with major retailers by expanding its fledgling lineup of private-label brands to include grocery items.
The online retail giant is preparing to add milk, cereal and baby food to its Elements brand, The Wall Street Journal reported Thursday. Amazonlaunched the Elements brand last year, selling diapers — now discontinued — and baby wipes to Prime subscribers, who pay $99 a year for free two-day shipping, among other things.
The company reportedly sought trademark protection earlier this month for more than two dozen categories under its Elements brand including coffee, soup and pasta as well as household products like razor blades and cleaning supplies. Amazon has also sought partnerships with some private-label food manufacturers, including TreeHouse Foods, a major private-label producer, according to the Journal’s report.
Amazon declined to comment.
The reported move mirrors the strategy of several major retailers, including Costco, Walmart and Target, which have recognized the lucrative nature of selling groceries. Private-label portfolios tend to have higher profit margins than brand-name goods because the companies save on marketing and brand development.
US consumers spent $120 billion on private-label products in 2014, a 2.1 percent increase year over year, according to market researcher Information Resources.
It wasn’t immediately clear when the expansion would be rolled out or whether the new items would be limited to Prime customers. It’s possible that the sale of grocery items might be paired with AmazonFresh, the e-commerce giant’s grocery delivery service.
Available in Seattle, San Francisco, San Diego, Los Angeles, Philadelphia and New York, AmazonFresh lets customers order fresh produce, dairy, meat and other groceries online and then delivers the goods to customers’ doorsteps — offering free same-day and early morning delivery on orders that exceed $35.