CNBC: Amazon demotes private label ads
- Amazon reportedly removed some promotions for its private label products on its site, CNBC reported. The private label products are created by Amazon or its partners and sold exclusively on the site under a special brand name.
- Amazon began promoting the products about a year ago, and the ads appeared in highly visible locations on the site, such as at the top of search results or near the "buy" button on a competitor's product page. Over the past few weeks, Amazon has scaled back these ads or relocated them, according to CNBC's sources of Amazon sellers and consultants.
- The change to the private label product ads comes as major tech companies are facing increased regulatory scrutiny. Sen. Elizabeth Warren and other public officials have called for the breakup of big tech companies including Amazon and Google.
Brands and sellers have called Amazon's practice of promoting its own private label products unfair, as many companies are investing huge portions of their budgets to advertise on the platform. Amazon is now the third-largest digital advertising platform, behind Google and Facebook, and the e-commerce giant's ad business is projected to grow 50% this year as it snaps up a larger share of the digital ad market, according to eMarketer.
Even with the promotions, Amazon said private label brands haven't seen much success, accounting for about 1% of retail sales, per CNBC. The quiet removal of these private label promotions in prime locations on the site follows Amazon's recent suspension of ads for products that don't make money.
Amazon has been working to expand its private label offerings on its site over the past few years, as they offer better profit margins for Amazon compared to third-party products, allow for more streamlined supply chain management and are part of the e-commerce giant's efforts to compel rival brands to slash prices to better compete on the site, according to CNBC.
Major tech companies, including Amazon, Google and Facebook, are facing more scrutiny from government regulators over the fairness of their advertising practices, privacy and other issues, and their dominance has been questioned as posing a threat to fair competition. Along with Sen. Warren calling for the companies' to break up, other public officials have weighed in the issue. Google was recently fined $1.7 billion by European antitrust regulators for limiting how websites display competitor ads.