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.
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.
A Waymo rider-only robotaxi is seen during a test ride in San Francisco, California, U.S., December 9, 2022.
Paresh Dave | Reuters
Alphabet’s Waymo unit plans on bringing its robotaxi service to Dallas next year, adding to a growing list of prospective U.S. markets for 2026, including Miami and Washington, D.C.
Rental car company Avis Budget Group will be managing the Waymo fleet in Dallas, via a new partnership the companies announced Monday.
Avis CEO Brian Choi said in a statement that the agreement marks a “milestone” for the company, which is now also working to become “a leading provider of fleet management, infrastructure and operations to the broader mobility ecosystem.”
Waymo robotaxi testing is already underway in downtown Dallas involving the company’s Jaguar I-PACE electric vehicles with the Waymo Driver system. That combines automated driving software, sensors and other hardware that power the vehicles’ “level 4,” driverless operations.
Passengers will be able to hail a driverless ride using the Waymo app in Dallas. In some other markets, Waymo only makes its services available through ride-hailing platform Uber.
Waymo has surged ahead in the robotaxi market while other autonomous vehicle developers, including Tesla, Amazon-owned Zoox, and venture-backed startups such as Nuro, May Mobility and Wayve, are working to make autonomous transportation a commercial reality in the U.S.
Waymo says it conducts more than 250,000 paid weekly trips in the markets where it operates commercially, including Atlanta, Austin, Los Angeles, Phoenix and San Francisco.
Waymo’s steepest competition internationally comes from Baidu’s robotaxi venture Apollo Go in China, which is eyeing expansion in Europe.
On Alphabet’s second-quarter earnings call, execs boasted that, “The Waymo Driver has now autonomously driven over 100 million miles on public roads, and the team is testing across more than 10 cities this year, including New York and Philadelphia.”
The business has become significant enough that Alphabet even added a category to its Other Bets revenue description in its latest quarterly filing.
“Revenues from Other Bets are generated primarily from the sale of autonomous transportation services, healthcare-related services and internet services,” the filing said.
The Other Bets segment remains relatively small, however, with revenue coming in at $373 million in the quarter, up from $365 million a year ago. The division still reported a loss of $1.25 billion, widening from $1.13 billion in the second quarter of 2024.
Ray-Ban Meta smart glasses on display in the window of a Ray Ban store in London, UK, on Friday, July 19, 2024.
Bloomberg | Bloomberg | Getty Images
Revenue from sales of Ray-Ban Meta smart glasses more than tripled year over year, EssilorLuxottica revealed Monday as part of the company’s most recent earnings report.
EssilorLuxottica said the success of the Ray-Ban Meta glasses, built via a partnership with the Facebook parent stemming back to 2019, contributed to its first-half overall sales of 14.02 billion euro (US$16.25 billion), which represents a 7.3% year-over-year jump.
“We are leading the transformation of glasses as the next computing platform, one where AI, sensory tech and a data-rich healthcare infrastructure will converge to empower humans and unlock our full potential,” EssilorLuxottica CEO Francesco Milleri and deputy CEO Paul du Saillant said in a joint-statement. “The success of Ray-Ban Meta, the launch of Oakley Meta Performance AI glasses and the positive response to Nuance Audio are major milestones for us in this new frontier.”
In the earnings report, the company said that its new Oakley Meta smart glasses, unveiled in June, represents the latest product line to come from its partnership with the social media company. CNBC reported in June that Meta and Luxottica plan to debut a Prada-branded version of its smart glasses in the future.
Luxottica owns several well-known brands including Ray-Ban, Oakley, Vogue Eyewear and Persol.
In September, Meta renewed a long-term partnership agreement with Luxottica to “collaborate into the next decade to develop multi-generational smart eyewear products,” according to the announcement.
The logos of Bitcoin, Ethereum, and Tether outside a cryptocurrency exchange in Istanbul, Turkey, on Wednesday, Nov. 6, 2024.
David Lombeida | Bloomberg | Getty Images
The crypto market’s bullishness may be tipping into speculative frenzy, if the latest MicroStrategy-style copycat is any indication.
On Monday, a little-known Canadian vape company saw its stock surge on plans to enter the crypto treasury game – but this time with Binance Coin (BNB), the fourth largest cryptocurrency by market cap, excluding the dollar-pegged stablecoin Tether (USDT), according to CoinGecko.
Shares of CEA Industries, which trades on the Nasdaq under the ticker VAPE, rocketed more than 800% at one point after the company announced its plans. CEA, along with investment firm 10X Capital and YZi Labs, said it would offer a $500 million private placement to raise proceeds to buy Binance Coin for its corporate treasury. Shares ended the session up nearly 550%, giving the company a market cap of about $48 million.
Given the more crypto-friendly regulatory environment this year, more public companies have adopted the MicroStrategy playbook of using debt financing and equity sales to buy bitcoin to hold on their balance sheet to try to increase shareholder returns, pushing bitcoin to new records.
Now, with the S&P 500 trading at new records, the resurgence of meme mania and a pro-crypto White House supporting the crypto industry, investors are looking further out on the risk spectrum of crypto hoping for bigger gains.
In recent months, investors have rotated out of bitcoin and into ether, which led to a burst of companies seeking a similar treasury strategy around ether. SharpLink Gaming, whose board is chaired by Ethereum co-founder Joe Lubin, was one of the first to make the move. Other companies like DeFi Development Corp, renamed from Janover, are making similar moves around Solana.
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