Amazon hoping private labels hit Millennials’ sweet spot

Amazon’s SAN FRANCISCO re-ported shift into private label grocery offerings takes a page out of the basic retail strategy book it has aggressively pursued, often to the chagrin of brick and mortar competitors.

But Amazon has an even bigger incentive than Target and Walmart did when they expanded into private-label products more than a decade ago: Millennials.

The generation that has grown up with the Internet has shown more loyalty to distributors — say flight-and hotel-aggregator Kayak.com or delivery services Uber Eats — than the end brand that provides the good or service, says Phil Lempert, a Los Angelesbased consumer analyst who focuses on food trends.

In the case of an Amazon-branded coffee or detergent, Amazon already “owns” the customers’ loyalty and trust, which means its own name carries weight, Lempert says. The private label means the item is likely to be cheaper, a draw for America’s largest living generation, who are now in their 20s and early 30s.

“Millennials care about quality and price and taste; they’re brand agnostic. It’s a sweet spot for Amazon,” he said.

Along with detergent and diapers, the Seattle-based online retailer plans to sell private label nuts, spices, tea, coffee, baby food and vitamins, according to a report in The Wall Street Journal. Amazon would not comment.

The product expansion can help Amazon continue to be the go-to choice for the connected generation, as well as reshape consumer perception about where they can go to get the things they need every day, according to Market Track, a Chicago-based market analysis firm. That’s something that traditionally happened in brick and mortar stores but which Amazon wants to move online. The move is not completely foreign to Amazon, which already sells electronics accessories and home goods under its Amazon Basics brand.

In the grocery world, private label brands are a big money maker. The items are often produced in the same plants as name-brand items but are labeled with a store brand, saving all the cost of advertising and thus allowing them to be sold for less.

The products will only be available to Amazon Prime members, according to the Journal. Members pay $99 a year for two-day delivery, free streaming video and a host of other extras.