Why are Amazon’s brand knockoffs ‘foul play’ if other retailers do the same thing?

Discussion
Peak Design Everyday Sling (left); Amazon Basics Everyday Sling (right) - Source: Peak Design video
Oct 13, 2022

The 800-pound gorilla that is Amazon.com finds itself coming off as a corporate bully when its private label teams find small and growing brand products and then produce knockoff versions that it sells at a considerable discount. The practice has led to calls of foul play by the brands it is copying and caught the attention of politicians and regulators who think the retailing, logistics and technology giant has crossed the antitrust behavior line.

CNBC reports on the experience of Peak Design, a supplier of camera bags and accessories that does most of its sales on Amazon’s platform. Peak discovered that its most popular item, the Everyday Sling Bag, had competition in the form of an AmazonBasics bag that used the same name.

“They copied the general shape, they copied the access points, they copied the charcoal color, and they copied the trapezoidal logo badge,” Peak CEO Peter 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’s bag, which sells at a fraction of Peak’s $90 price, led Mr. Dering and company to create a pushback video on YouTube.

“This is the Everyday Sling by Peak Design and this is the Everyday Sling by AmazonBasics,” says the video’s narrator. “It looks suspiciously like the Peak Design Everyday Sling, but 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. Instead you just get a bag designed by the crack team at the AmazonBasics department.”

Peak’s video caught the attention of the writers at “Last Week Tonight with John Oliver” for a segment the show did in June on tech monopolies.

Recode reported in July that Amazon considered exiting private label businesses to reduce the heat it is taking from regulators scrutinizing its business practices. The company has been accused of prioritizing its private brands in search listings and of using in-house sales data to identify and copy best-selling products sold on its marketplace.

Amazon downplayed the reporting.

“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,” Amazon management said in a statement.

DISCUSSION QUESTIONS: Does Amazon’s approach to developing private label products differ from most other retailers? What about its use of search results to promote its private labels?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
" It’s a fine line between 'retailers have always done this' and unfair business practices."
"Although it has to be frustrating for brand manufacturers. Kudos to Peak Design for poking fun at it and making an entertaining video."
"The pirating of designs needs more attention and stronger regulation."

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29 Comments on "Why are Amazon’s brand knockoffs ‘foul play’ if other retailers do the same thing?"


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Mark Ryski
BrainTrust

Yes, Amazon’s approach is different — they have more data and know how to use it better than any other retailer. And while some may be offended by the enormous power advantage Amazon has over its sellers — and they way they use it — retailers with private label aspirations have been doing this for decades. I don’t believe Amazon will need to close down their private label plans, but they need to seriously look at how they bring private labels to market. Crushing small creative companies is wrong — and they don’t need to do it to be successful.

Gene Detroyer
BrainTrust

How big can a company with a successful product be before Amazon says, “Big enough? We can copy them now.”?

Neil Saunders
BrainTrust

Retailers have always produced their own versions of popular products. It continues today. Just recently I saw a Kroger Simple Truth prebiotic soda that is clearly a response to successful brands like Poppi. Unfortunately, Amazon attracts more scrutiny as it is in the sightline of some politicians who parrot a simple “big = bad” narrative and who have very little understanding of consumer markets and how they work. At the end of the day, the consumer has a choice and they can choose Amazon brands or not. Which is precisely why Amazon doesn’t always have success with its private label products – indeed, it has scrapped many because they didn’t generate enough revenue or deliver enough profit. Competition is very much alive and is very healthy in retail!

Gene Detroyer
BrainTrust

Exactly, “At the end of the day, the consumer has a choice. “They can choose Amazon brands or not.” Or, if they buy it and are not satisfied, return it. This is a choice between a higher-priced quality product and a lower-priced inferior product. The customer will vote with their dollars.

The retailer’s job is to provide choices. The customer’s job is to buy what they prefer.

Gary Sankary
BrainTrust

Walk through the sample rooms of any retailer with a private label program and you will find a ton of items from an assortment of different brands. They use those items to inspire and design their own products. Amazon is certainly no different. I believe, in this case, they are being called out unfairly by people who don’t understand how the private label business works.

Bob Amster
BrainTrust

The answer from this perspective is that, if the private label product is intended to simulate but does not measure up to the original product, it’s foul play and should be discouraged and even penalized (unfair trading practices?). Drug store chains sell many over-the-counter private-label products but they are not called by a similar name, the formulation is almost always the exact formulation of the national brand and there is no deceit intended, just fair competition. The old Sears & Roebuck Craftsman and Costco’s Kirkland brands are private label but not knock-offs. In fact they are often a higher-quality product, cheaper. This is black and white.

Jeff Sward
BrainTrust

How loudly can I yell FOUL PLAY…?! It’s one thing for a buyer to do competitive research in the open market, trolling stores, malls and websites to see what the competition is doing. It’s a completely different behavior when Amazon knows sales and returns behavior at the SKU level. It’s despicable behavior. Makes me want to avoid buying Amazon private label product — ever — under any circumstances. Further thoughts unprintable.

Gene Detroyer
BrainTrust

Don’t grocery chains have enough data to make private labels of the latest top sellers in their stores without trolling stores, malls, and websites to see what the competition is doing? Shouldn’t they be doing it in any case?

Jeff Sward
BrainTrust

Fair point — to a degree. Just like department stores have intimate data on all their better brands. But I think they are very careful about what they knock off and how. Different brands have different muscle. Some brands can serve up consequences, but most can’t. If Nike were still on Amazon, would Amazon be knocking them off? Nope. Brand power and consequences. But it’s perfectly fine to roll over the small guy with no brand power and who can’t deliver any consequences? Just because the conquering horde can overrun the peasant farmers doesn’t make it OK. I don’t know how to draw any hard lines here, but this is worth more than a shoulder shrug in the face of obvious bullying.

Gene Detroyer
BrainTrust

But, if YOU are the Chief Product Officer or even CEO, do you really say, “We can’t do that. They are too small, we will hurt them.”?

Jeff Sward
BrainTrust

How about …”We can’t do that. We will hurt ourselves. We can’t be the brand and platform that invites brands and retailers to use us but then say, implicitly, but just know we will knock you off the instant we detect a best seller.” Amazon can be a value adder or a value destroyer. They can respect and nurture brand relationships … or not. They don’t need to be predatory to fuel their growth. At what point does their private label behavior scare off more sellers than it does attract new customers?

At one point in my career as a retailer, I’m sure I would have been full steam ahead on the knockoffs, pressuring the brand relationship. Retailer arrogance is timeless. I’d like to think there is a more nuanced way to manage private label in this day and age.

Gene Detroyer
BrainTrust

Jeff, your response is thoughtful as well as your concluding paragraph. How many of us would make the same decision personally vs. business?

I believe in one way or another, management always considers the effect on the company. In these cases, the net was to do it. Positive over negative.

Jeff Sward
BrainTrust

Thanks Gene, and I hear you. Like I said, there was a point I would have followed a course similar to Amazon. If an item is out there for sale, it’s fair game. The fact that I know the details is beside the point. But at some juncture, data access does become the point. What is fair and appropriate is a different question that what is legal or what can be regulated. I wish I had a better way of describing where I think the lines should be drawn. I don’t. But I can hold up a red flag when I think I’m witnessing unfair or bullying behavior. Thanks for the exchange!

Dion Kenney
BrainTrust
3 months 15 days ago

Typically, the question for regulation revolves around “monopoly power” – a business’ ability to influence the market due to its size and/or marketshare. Amazon is a little different. It is a large retailer, but not large enough to be deemed a monopoly. However its competitive strength is its three or four meaningful levels of vertical integration: 1.) it owns the dominant online retail outlet, 2.) it owns the dominant platform for other online businesses (AWS), 3.) it owns and has proprietary control of product performance data – which it slices and dices to identify the most profitable products, and perhaps 4.) it can produce its own products which can receive preferable positioning in search results. Individually, none of these are triggers for regulation. And in recent years, there has been little appetite to pursue monopoly power cases. I don’t expect to see it deployed here either.

Gene Detroyer
BrainTrust

Let’s see. A national grocery chain finds that a new cookie developed by a bakery start-up has sales that are not only big but also accelerating. The private label department thinks a copy would be a great success.

The private-label version is made with cheaper ingredients and is priced considerably lower. Of course, while it looks like the original it doesn’t taste quite the same.

Are we concerned about the retailer’s approach to PL?

Georganne Bender
BrainTrust

We should be. Google Tuesday Bassen vs. Zara. The one thing that is on the small designer/retailer’s side is a strong social media following that is vocal. Small companies generally don’t have deep pockets for extensive litigation like the big guys do.

Dr. Stephen Needel
BrainTrust

The question is not philosophically is it or isn’t it foul play. It isn’t, because all retailers do it. The ethical issue is a personal one – if you think Amazon is taking advantage of small sellers (on Amazon’s website – let’s not forget this), then don’t buy from Amazon. If you think it’s fair game, like most retailers do, to take an existing product and produce a less expensive version, keep on shopping Amazon.

Dick Seesel
BrainTrust

The difference between what Amazon is doing and what retailers have done for years (develop private brand products similar to others’ best sellers, hopefully without crossing an intellectual property line) is that Amazon owns or manages a ton of data. When other brands use AWS or market their products on Amazon.com, they are providing sales data to Amazon whether they intended to or not. It’s a fine line between “retailers have always done this” and unfair business practices.

Lisa Goller
BrainTrust

Most private label strategies are alike: see what sells, reimagine in-demand features then differentiate it enough as an own brand. Amazon is often singled out as a tech platform, even though other retailers also collect product data and imitate bestsellers.

Years ago, reports said Amazon prioritized its private labels. That seems to have changed. This week during Prime Day, I had to filter for Amazon brands, as third-party sellers consistently dominated search results.

Georganne Bender
BrainTrust

Stealing designs from indie designers and small companies isn’t anything new. Amazon isn’t the only company doing it, it just happens to be the biggest.

Working in the creative industries as much as we do, I see this a lot. Saying that it has always happened is an insult to every person who has had their livelihood affected by big companies knocking off their hard work. The pirating of designs needs more attention and stronger regulation.

Gene Detroyer
BrainTrust

When you make a product that doesn’t have “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” and is obviously inferior, that doesn’t sound like piracy to me.

Georganne Bender
BrainTrust

Tell that to the independent product creators and project designers in the craft industry. If you steal my design, however long and how I worked on it, it’s still theft.

Steve Montgomery
BrainTrust

Typical retailers can determine which items are selling well that they may want to create a private label version of. True few, if any, have the wealth of information Amazon collects on its customers and what they buy.

All retailers including Amazon can determine the placement of the products they purchase from their vendors and their private label items and the pricing. Consumers are free to select either. The fundamentals are the same. As has been stated on RetailWire before, companies who select to sell on Amazon run this risk. In this case it may be seller beware.

Jeff Weidauer
BrainTrust

Amazon isn’t new to the copying game – it’s been going on for many years in retail. Any successful seller will have to deal with it. Peak Design has done a great job of pointing out the differences, and to Peak’s core customer, those differences will matter. For those who buy the Amazon knock-off, they likely wouldn’t have been a Peak customer anyway.

Natalie Walkley
BrainTrust
Natalie Walkley
Director, Körber & Enspire Commerce OMS
3 months 15 days ago

I totally agree with this. It’s different audiences— price-conscious and quality-conscious.

Natalie Walkley
BrainTrust
Natalie Walkley
Director, Körber & Enspire Commerce OMS
3 months 15 days ago

As much as people don’t want to admit it, Amazon is not doing anything new, or predatory. Although it has to be frustrating for brand manufacturers. Kudos to Peak Design for poking fun at it and making an entertaining video. But I would argue that anyone wanting a $30 bag is not the same audience as folks purchasing a $90 bag, so my guess is the impact will be minimal for their target audience. But it goes without saying this is why so many brands are trying to expand to more of a controlled customer experience on their owned channels.

James Tenser
BrainTrust

A search of the USPTO Trademark database reveals roughly 2,500 brand marks owned or applied for by Amazon.com. This is an indication of the massive scope of Amazon’s private brands program. (A few hundred of those are associated with its technology businesses. The rest are for consumer products.)
Why I think this is important: Amazon is capable of creating competitive brands in just about every product category we can think of, working with contract manufacturers, of course. And as others here observe, it has access to unmatched shopper data that lets it identify best-selling and trending branded items.

I believe this massive program may sometimes be “predatory” in spirit, if not under the law. Deserving the most sympathy are the scrappy innovators who use the the Amazon platform to launch and distribute new products only to find them copied as soon as they record some success.

There’s a fine line between private brands and knockoffs. Most retailers navigate carefully so as not to offend their important brand suppliers. Amazon seems less worried about this.

Craig Sundstrom
Guest

“But none of the fine details that make it a Peak Design bag.” That of course is what Peak needs to emphasize.
As for the more general issue: yes, huge size confers a lot of advantages, and, of course, power. No one really has an answer to that (other than to hide behind a lot of theory that at some point goes from being an economic model to naive apology). At some point a company may become so large that some legal intervention may become necessary — even if (only) politically necessary — but I don’t think with Amazon we’re at that point … yet.

Oliver Guy
BrainTrust

This is no different to the way in which Lidl and Aldi produce own-branded grocery offerings, often using packaging that at a distance is identical in colour and style. (If you need an example, compare a Google Image search for McVities Jaffa Cakes with one for Aldi Jaffa Cakes).

That does not mean it is right or wrong, it is just an approach. There are times when legal cases are made — and agreements are made.

Amazon has the ability to place their products at the top of searches which makes things even more interesting.

wpDiscuz
Braintrust
" It’s a fine line between 'retailers have always done this' and unfair business practices."
"Although it has to be frustrating for brand manufacturers. Kudos to Peak Design for poking fun at it and making an entertaining video."
"The pirating of designs needs more attention and stronger regulation."

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