How Amazon’s big private-label business is growing and leaving small brands to protect against knockoffs

Published

3 years ago

October 12, 2022

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Peak Design has been making camera bags and accessories for a dozen years, relying on Amazon for the bulk of its sales. Last year, founder and CEO Peter Dering discovered Amazon was selling a bag that looked strikingly similar to Peak’s top-selling product, the Everyday Sling Bag.

“They copied the general shape, they copied the access points, they copied the charcoal color, and they copied the trapezoidal logo badge,” Dering told CNBC. “But none of the fine details that make it a Peak Design bag were things that they could port over because those things take a lot more effort and cost.”

Amazon even snagged the name, calling its own product the Everyday Sling.

What Amazon lacked in originality and quality it made up for in price. While Peak’s bag currently costs almost $90 on Amazon, the knockoff version from Amazon’s homegrown AmazonBasics brand was selling for about two-thirds less.

That motivated Dering’s team to respond with a snarky video, poking fun at Amazon’s questionable methods.

“You don’t have to pay for all those needless bells and whistles, like years of research and development, recycled bluesign-approved materials, a lifetime warranty, fairly paid factory workers and total carbon neutrality,” a man’s voice said in the video. “Instead, you just get a bag designed by the crack team at the AmazonBasics Department.”

The video went viral and in June was featured by HBO’s John Oliver in a segment on tech monopolies. Amazon later stopped selling its version of the bag, after Peak Design fans pummeled its ratings with a flurry of negative reviews.

Peak Design CEO Peter Dering compares his company’s Everyday Sling Bag to the Amazon private label version at his San Francisco headquarters on September 6, 2022.

Katie Schoolov

For Amazon, whose expansive marketplace is in the crosshairs of regulators that are cracking down on Big Tech, stories like these from its private-labels division have caused added headaches. In 2020, the European Commission charged Amazon with using its size, power and data to push its own products and gain an unfair advantage over rival merchants that also use its platform. Earlier this year, Amazon said it would limit its use of marketplace seller data.

Meanwhile, the attorney general of California has filed an antitrust suit against Amazon, and the American Innovation and Choice Online Act being considered by Congress would crack down on Big Tech’s ability to leverage dominant market power at the expense of small businesses. The bill has yet to make it to a vote.

But while Amazon may be pushing the boundaries of what’s acceptable in private labeling, there’s nothing illegal about copying brand-name products. It’s a business practice that, in some capacity, is widely used by most major retailers.

A selection of some of Amazon’s 118+ private label brands as of October, 2022.

Mallory Brangan

‘Low price’ and ‘acceptable quality’

A private label is just like a store brand. A retailer finds a manufacturer to make an affordable “white label” version of a branded product. The manufacturer puts the retailer’s own brand on the packaging, and it then sells for an average of 25%-40% less than the national brand-name product, according to Kusum Ailawadi, a marketing professor at Dartmouth College who’s been researching private labels for 25 years.

“The history of private label, in the U.S. anyway, is very much a perception of low price and at best acceptable quality,” said Ailawadi, adding that the model dates as far back as the 1950s.

Retailers more recently have tried to change the view of store brands by focusing on something that captures a consumer’s interest. For example, Safeway has an O Organics brand and Kroger offers a line of baby products called Comforts.

Others put most of their products under store brands, such as Walmart‘s Great Value and Sam’s Choice lines or Costco‘s Kirkland Signature. In other cases, store names double as brand names, such as CVS and Trader Joe’s. Many such products are copycats.

“They will put it next to the national brand with whom they are trying to compete, with a me-too packaging, a similar look and then even have a big sign that says, ‘Buy basically the same product or better at 30% lower price,'” Ailawadi said. “Some of the practices around private label that are now under scrutiny by Congress and other people have not only been around a long time, they are perfectly acceptable practices.”

But Amazon is doing something different, according to Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, an activist group that fights big corporations. She said Amazon brings a powerful data engine to the table.

“Amazon has developed a lot of these private labels by gathering data, essentially spying on the companies that have to rely on its website in order to reach consumers,” Mitchell said. “They also know what search terms people are using, what they’re clicking on, how long their mouse is hovering in a certain place. And so they are able to analyze all of that data for a level of insights that simply are not available to your typical chain retailer.”

Amazon also has more power to steer shoppers to particular products than a typical brick-and-mortar retailer.

Amazon has the “ability to take one particular product and shove it on page 10 of the search results while giving another product, say, their own product, lots of space right there on the first page of search results,” Mitchell said. “We know that really alters and steers buying behavior.”

In 2020, Congress questioned Amazon founder and then-CEO Jeff Bezos about whether his company uses third-party seller data in making business decisions.

“We have a policy against using seller specific data to aid our private-label business,” Bezos said. “But I can’t guarantee you that policy has never been violated.”

An Amazon spokesperson told CNBC in September, “We do not use data about individual sellers that isn’t public to determine which private brand products to launch, and we have a policy to protect seller data that goes further than any other retailer we know of.”

How private labels are made is often shrouded in mystery, leading to speculation around certain products. For instance, Grey Goose has had to dispel rumors that it makes Costco’s Kirkland Signature vodka.

Ailawadi said some private labels are made by national brand manufacturers, who use their excess capacity to make products for others. Then there are specialty firms that only do private labels, and some store brands have their own devoted manufacturing facilities. Although Amazon released a list of more than 100 suppliers in 2019, it didn’t respond to questions about who makes its private labels today.

AmazonBasics batteries are shown on September 29, 2022.

Andrew Evers

Amazon first entered the private-label business around 2009, with its AmazonBasics brand of staple goods such as discount batteries. It now has at least 118 private-label brands, according to data from e-commerce analyst company DataWeave. Some of its brands carry the Amazon name or logo, such as Happy Belly snacks, Amazon Collection jewelry and Amazon Essentials clothing. Others such as Solimo home products and clothing lines Lark & Ro and Goodthreads give little indication they’re Amazon brands.

Private labels make up just 3% of Amazon’s sales volume by dollar share in grocery, household and health and beauty categories, according to a recent study by Numerator. By comparison, private labels make up a whopping 77% of Aldi’s sales, followed by Trader Joe’s at 59% and Wegmans at 49%.

Amazon continues to invest in private labels

Numerator data also found that AmazonBasics came in third for fastest-growing private label. That comes after a Wall Street Journal report that found Amazon drastically reduced the number of private-label items on its site in the first half of this year. The Journal reported that executives had discussed exiting the private-label business entirely to ease antitrust scrutiny.

In a statement, Amazon disputed that notion.

“We never seriously considered closing our private label business, and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today,” the company said.

Private labels clearly represent a lucrative opportunity. Target told CNBC that 12 of its 48 “owned brands” are each worth at least $1 billion.

Although Amazon doesn’t share sales data on individual brands, seller consultant Jason Boyce from Avenue7Media said internal data from his firm shows that Amazon sells tens of millions of dollars in AmazonBasics batteries each month.

“I don’t think that there’s any credence to the fact that Amazon’s sunsetting AmazonBasics products that are doing well,” Boyce said. “Are they culling the herd for products that are doing not so well? Absolutely. And any good business would do that.”

Ailawadi says private-label goods bring in around 25% higher profit margins for retailers than national brands, because of savings on things such as packaging, marketing and promotion.

A variety of Amazon’s private label goods are shown on September 29, 2022.

Andrew Evers

“There is nothing anti-competitive about comparing one product with another and saying that these products are very similar, and I’m selling you one at a lower price,” Ailawadi said. “That is as competitive as it gets.”

Internally, Amazon has to skate a fine line between creating profitable products that consumers want and protecting third-party sellers, who have become the lifeblood of the retail business. Amazon says third-party merchants make up more than 60% of its ecommerce business, and those businesses pay Amazon for services such as fulfillment and shipping.

Boyce said that “45% of every dollar goes back to Amazon” when an outside merchant makes a sale on the platform. “Why would they bite the hand that feeds them in that way?”

Not all of Amazon’s private-label efforts succeed. The company no longer sells a pair of shoes called the Galen that look eerily similar to AllBirds’ wool running shoes. With the Everyday Sling Bag, Dering says Peak Design came out on top thanks to all the media attention.

Dering has also learned one key lesson from the Amazon drama. He now gets a design patent for every one of Peak Design’s products, which number over 200. Each patent costs about $1,000, he said.

“I really recommend that for anyone who’s bringing a product that they don’t want to be knocked off,” Dering said.

Technology

Tesla Optimus robotics vice president Milan Kovac is leaving the company

Published

4 hours ago

June 6, 2025

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Tesla Optimus robotics vice president Milan Kovac is leaving the company

Tesla displays Optimus next to two of its vehicles at the World Robot Conference in Beijing on Aug. 22, 2024.

CNBC | Evelyn

Tesla’s vice president of Optimus robotics, Milan Kovac, said on Friday that he’s leaving the company.

In a post on X, Kovac thanked Tesla CEO Elon Musk and reminisced about his tenure, which began in 2016.

“I want to thank @elonmusk from the bottom of my heart for his trust and teachings over the decade we’ve worked together,” Kovac wrote. “Elon, you’ve taught me to discern signal from noise, hardcore resilience, and many fundamental principles of engineering. I am forever grateful. Tesla will win, I guarantee you that.”

Tesla is developing Optimus with the aim of someday selling it as a bipedal, intelligent robot capable of everything from factory work to babysitting.

In a first-quarter shareholder deck, Tesla said it was on target for “builds of Optimus on our Fremont pilot production line in 2025, with wider deployment of bots doing useful work across our factories.”

During Tesla’s 2024 annual shareholder meeting, Musk characterized himself as “pathologically optimistic,” then claimed the humanoid robots would lift the company’s market cap to $25 trillion at an unspecified future date.

In recent weeks, Musk told CNBC’s David Faber that Tesla is now training its Optimus systems to do “primitive tasks,” like picking up objects, open a door or throw a ball.

Competitors in the space include Boston Dynamics, Agility Robotics, Apptronik, 1X and Figure.

Kovac had previously served as the company’s director of Autopilot software engineering. He rose to lead the company’s Optimus unit as vice president in 2022.

Musk personally thanked Kovac for his “outstanding contributions” to the business.

Tesla didn’t respond to a request for comment.

WATCH: Tesla panel talks impact of Musk’s feud with Trump

'Closing Bell Overtime' Tesla panel talks impact of Elon Musk's feud with Pres. Trump

Technology

Tesla already had big problems. Then Musk went to battle with Trump

Published

4 hours ago

June 6, 2025

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Tesla already had big problems. Then Musk went to battle with Trump

President Donald Trump holds a news conference with Elon Musk to mark the end of the Tesla CEO’s tenure as a special government employee overseeing the U.S. DOGE Service on Friday May 30, 2025 in the Oval Office of the White House in Washington.

Tom Brenner | The Washington Post | Getty Images

Tesla has been facing massive challenges trying to get back on track after a disastrous first quarter. Those headwinds strengthened considerably this week.

CEO Elon Musk officially concluded his term with the Trump administration at the end of May, hitting the 130-day mark, the maximum time allowed for a “special government employee.” On his way out the door, Musk expressed sharp criticism of the Trump’s signature spending bill that’s being debated in Congress due to its expected impact on the national debt.

What started off as a policy disagreement quickly escalated into an all-out online brawl, with Musk and President Donald Trump hurling insults at one other from their respective social media platforms. After Musk called the “one, big beautiful bill” an “abomination” and rallied his followers on X to “kill the bill,” Trump said Musk had gone “CRAZY” and threatened to end government contracts and cut off subsidies for Musk’s companies. Musk responded, “Go ahead, make my day.”

The rift sent Tesla shares plummeting 14% on Thursday, wiping out roughly $152 billion in value, the most for any day in the company’s 15 year-history on the public market. While Musk is still the richest person in the world on paper, his net worth plunged by $34 billion, according to Bloomberg’s Billionaires Index.

More importantly, the spat brought about the collapse to a relationship that blended business, politics and power in a manner virtually unprecedented in U.S. history. The ramifications to Tesla, which fell out of the trillion-dollar club on Thursday, could be severe, and not just because Trump is reportedly considering selling or giving away the red Model S he purchased in March after turning the White House lawn into a Tesla showroom.

A senior White House official told NBC News on Friday that the president was “not interested” in having a call with Musk to resolve their feud.

Trump-Musk feud: Here's what's at stake for the Tesla CEO

Ire from the Trump administration could influence everything from future regulation, investigations and government support for Tesla, to decisions on tariff exemptions the company has been seeking in order to purchase Chinese-made manufacturing equipment.

Tesla shares were badly underperforming the broader market before the Musk-Trump breakup. Revenue slid 9% in the first quarter from a year earlier, with auto revenue plummeting 20%, due to the combination of increased competition from lower-cost EV makers in China and a consumer backlash to Trump’s political activities and rhetoric.

It’s certainly not what Tesla shareholders were expecting, when they sent the stock up about 30% in the days following Trump’s election victory in November. After spending close to $300 million to return Trump to the White House, Musk was poised to have a major role in the administration and be in position to push through regulatory changes in ways that benefited his companies.

Instead, his company has suffered, and Musk’s behavior is largely to blame.

One of his most divisive actions in leading the Trump administration’s Department of Government Efficiency (DOGE) was the dismantling of USAID, which previously delivered billions of dollars of food and medicine to more than 100 countries.

Beyond the U.S., Musk has endorsed Germany’s far-right extremist party AfD, and gave a gesture that many viewed as a Nazi salute at an inauguration rally.

In response, in recent months, there were numerous cases of vandalism or arson of Tesla facilities or vehicles in the U.S., as well as waves of peaceful protests at Tesla stores and service centers in North America and Europe.

Advertisements in protest of Musk have appeared in New York’s Times Square, and at bus shelters in London, urging people to boycott Tesla, some labeling the company’s EVs as “swasticars.” The Vancouver International Auto Show even removed Tesla from its exhibitors’ list fearing the company’s presence would cause safety problems.

On top all that are President Trump’s sweeping tariffs, which have led to concerns that costs will increase for parts and materials crucial for EV production. In its first-quarter earnings report in April, Tesla refrained from promising growth this year and said it will “revisit our 2025 guidance in our Q2 update.”

Board is mum

Pension funds that invest in Tesla have said the “crisis” at the company requires a leader to work a minimum of 40 hours per week to focus on solving its problems.

Public officials are echoing that sentiment, and calling on Tesla’s board to take action.

New York City Comptroller Brad Lander said on Thursday in s statement to CNBC that the “schoolyard fight” between Trump and Musk highlights how “Tesla’s weak accountability measures and poor governance threaten not only the company’s financial stability and shareholder value, but also the future of homegrown EV production.”

Brooke Lierman, comptroller of Maryland, told CNBC in an email that the company’s board “is not doing its job to ensure that there is a CEO at Tesla who is putting the company’s interests first.”

Since Musk’s name is synonymous with Tesla, the board needs to ensure that Tesla can stand on its own regardless of who’s leading the company, she added.

“Musk’s behavior continues to threaten the future of Tesla,” Lierman said. “As long as Tesla is identified with Elon Musk and he continues to be a polarizing figure, he will continue to damage the brand which is a huge part of Tesla’s value.”

Musk didn’t respond to a request for comment. CNBC also reached out for comment to board chair Robyn Denholm and directors and executives who work in government relations and in the office of the CEO. None of them responded as of the time of publication.

Elon Musk interviews on CNBC from the Tesla Headquarters in Texas.

CNBC

Tesla investors focused on business fundamentals are justified in their skepticism.

The company has failed to roll out innovative and affordable new model EVs, while Chinese competitors like BYD have flooded the market, particularly in Europe.

Analysts at Goldman Sachs on Thursday lowered their price target on Tesla mostly due to the outlook for 2025. Deliveries this quarter are tracking lower for the U.S., the analysts noted, while European sales saw a 50% year-over-year decline in April and another double-digit drop in May. China sales from those two months were down about 20% from a year earlier.

Quality is also a problem. Tesla has announced eight voluntary recalls of the Cybertruck in 15 months due to a range of issues including software bugs and sticking accelerator pedals.

Robotaxi ready?

Musk is urging investors to largely ignore the core business and look to the future, which he says is all about autonomous vehicles and humanoid robots.

But even there, Tesla is behind. In AVs the company has ceded ground to Alphabet’s Waymo, which is operating commercial robotaxi services in several U.S. markets. After a decade of missed deadlines, Musk has promised a small launch of a Tesla driverless ride-hailing service in Austin this month.

The Austin robotaxi service will operate in a geofenced area, Musk said in a recent interview with CNBC’s David Faber, and will begin with a small fleet of just 10 to 20 Model Y vehicles with Full Self-Driving (FSD) Unsupervised technology installed. If all goes well, Musk has said, Tesla will try to rapidly expand its driverless offerings to other markets like San Francisco and Los Angeles.

Watch part 1 of CNBC's interview with Tesla CEO Elon Musk

What consumers won’t be seeing anytime soon are the Cybercab and Robovan vehicles that Tesla touted at its “We, Robot” event last year to drum up customer and investor enthusiasm.

On Friday, Milan Kovac, Tesla’s vice president of Optimus robotics, announced he was leaving after joining the company in 2016. Musk thanked him for his “outstanding contribution” in a post on X.

Still, there are plenty Tesla bulls and Musk fanboys who are believers in the CEO’s vision. The stock’s 4% rebound on Friday is a sign that some saw an opportunity to buy the dip.

“I think the real story here is the investor base of Tesla literally doesn’t care about anything,” Josh Brown, CEO of Ritholtz Wealth Management and CNBC PRO contributor, told CNBC’s “Halftime Report” Friday. “This is still a nothing matters stock.”

FundStrat’s Tom Lee said the Tesla selloff was “overdone.”

Tesla’s market cap, which is dramatically inflated relative to every other U.S. car maker, is built on Musk’s vision of Tesla’s Optimus humanoid robots doing factory work and babysitting our children, while self-driving Cybercabs and Robovans make money carting around passengers.

Morgan Stanley’s Adam Jonas wrote in a note this week that, “Tesla still holds so many valuable cards that are largely apolitical,” pointing to what he sees as the company’s “AI leadership, autonomy/robotics, manufacturing, supply chain re-architecture, renewable power, [and] critical infrastructure.”

In terms of Tesla’s existing business, the most immediate impact from what’s happening in Washington D.C., is the rollback of EV credits in the current budget bill that Musk loudly opposes and that’s struggling to find sufficient support in the Senate. There’s also the matter of the tariffs and whether Tesla is able to get preferred treatment, a proposition that seems increasingly unlikely with the Musk-Trump fallout.

Matthew LaBrot, a former Tesla staff program manager, told CNBC that he’s not surprised that Musk blew up his relationship with the president. LaBrot was terminated earlier this year after sending an open letter in protest of Musk’s divisive political activity.

“I am devastated for the country and the climate, though Elon only has himself to blame,” LaBrot said in an interview. “Back a loose canon, expect stray canon fire.”

Tesla investors can’t know at the moment how much of Musk’s energy and time will now return to his lone public company, and the business responsible for the vast majority of his wealth. Even without politics, he still has SpaceX, AI startup xAI and brain tech startup Neuralink, among other businesses.

As of Thursday, Musk still had a West Wing office that hadn’t been cleaned out, two administration officials told NBC News. The space will likely be packed up in the coming days, one of the officials said.

And while his time in the Trump camp may be over, Musk has called on his followers to form a new party in the U.S.

“Is it time to create a new political party in America that actually represents the 80% in the middle?” he wrote on X on Thursday, in a post that’s now pinned at the top of his page. According to the post, 80% of 5.6 million respondents to the unofficial poll said “yes.”

Musk’s actions this week may have caused a permanent rift with the president. But one thing is clear — his company can’t get away from the White House.

WATCH: Impact of Musk’s feud with Trump

Technology

DocuSign stock tanks 18% after company cuts billings outlook

Published

12 hours ago

June 6, 2025

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DocuSign stock tanks 18% after company cuts billings outlook

The Docusign Inc. application for download in the Apple App Store on a smartphone arranged in Dobbs Ferry, New York, U.S., on Thursday, April 1, 2021.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Shares of DocuSign tanked 18% in trading on Friday, a day after the e-signature provider reported stronger-than-expected earnings but slashed its full-year billings outlook.

Here’s how the company performed in the fiscal first quarter, compared with estimates from analysts polled by LSEG:

Earnings per share: 90 cents, adjusted, vs. 81 cents expected
Revenue: $764 million vs. $748 million expected

Billings, a closely-watched sales metric, came in at $739.6 million in the fiscal first quarter, which ended April 30. That was lower than the $746 million expected by analysts, according to StreetAccount. It also fell short of the company’s own forecast, which guided for billings between $741 million and $751 million.

For the current fiscal year, DocuSign said it expects billings of $3.28 billion to $3.34 billion, down from a range of $3.3 billion to $3.35 billion.