Amazon quietly begins selling private-label coffee, baby food

Dive Brief:

• Amazon has launched its first round of private-label perishable food products, including Happy Belly brand whole-bean and ground coffee and Mama Bear bottled baby food in two flavors.
• The company added the brands to its e-commerce platform with little coinciding promotional effort. These products are only available to Prime subscribers.
• Analysts expect Amazon to launch more brands in the future, including Presto! and Wickedly Prime, a line of snack foods. Happy Belly will also likely expand into more categories, ranging from nuts and trail mix to tea and cooking oil, according to a Wall Street Journal report last month.

Dive Insight:

Private-label brands offer Amazon another higher-margin sales growth opportunity, which Amazon seems to rarely shy away from. The company could shift savings from branding and marketing toward packaging innovations that reduce shipping costs. Such innovations could make entering the e-commerce marketplace that much more difficult and competitive for food and beverage manufacturers.

Private labels from retailers already challenge branded product manufacturers, as private labels' low-cost model allows for more competitive pricing while still focusing on quality ingredients and convenience. The combination of a private label's pricing and the convenience of home delivery, thanks to Amazon's e-commerce expertise and distribution network, could present a new slate of challenges for manufacturers at grocery stores and online. 

However, Amazon isn't focused solely on a low price point, and some of its products are even slightly more expensive than popular branded alternatives. 

But a quiet launch could signify that Amazon is not yet confident whether these private-label perishables are a long-term strategy. Amazon is no stranger to private labels, having launched everything from clothing lines to the AmazonBasics brand of assorted gadgets. But the company was similarly quiet for its clothing line rollouts over the past year, so Amazon could just be testing the waters in a new category before launching a major marketing initiative.

Amazon has made other strides into the food and beverage industry, including Amazon Fresh grocery delivery and itsAmazon Dash buttons. But those services tended to keep Amazon as the middleman between consumers and food and beverage brands.

Now with its own private-label brands, Amazon is entering the industry in a new way. The question is whether or not those brands will gain traction among consumers.