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Amazon’s Growth In This Category Is Astounding — And Accelerating

Walmart (WMT) and Target (TGT) are growing their private label brands at a quick clip, but new research shows that Amazon‘s (AMZN) number of house brands has skyrocketed in the last year alone.

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According to research firm L2 Gartner, 66 of Amazon’s 80 private label brands came to life between March of 2017 and 2018, a real ramp-up from prior years.

By contrast, the e-commerce behemoth introduced its first three exclusive brands in 2009, followed by a period of quiet until 2014, when it rolled out 11 more labels over the next two years.

AmazonBasics and Amazon Elements are two of the company’s most successful private labels, as items such as batteries, USB cables and baby wipes sell well.

But analysts expect apparel to be a major growth category for the company this year.

“Legacy brands and retailers should expect to see more private label brands from Amazon in the near future,” warned L2 researchers.

Instinet analyst Simeon Siegel estimated in December that Amazon was “already one of, if not the, largest apparel retailers,” and should see double-digit growth in the category, partly driven by its own brands. And Euromonitor data says Amazon beats Walmart‘s (WMT) online sales of clothes and shoes five-fold.

In fact, most of Amazon’s new exclusive brands are things you can wear: L2 says 86% of the company’s private labels fall under the clothes, shoes and jewelry category.

“Like AmazonBasics in Electronics Accessories, it will likely take years before Amazon private label brands become true leaders in these categories,” said L2 researchers. “Amazon’s aggressive launch strategy shows the retailer is willing to let many private brands fail in order to develop its next AmazonBasics.”

In a separate report, One Click Retail said that it expects Amazon’s next private label expansions to be in pet carriers, diapers and patio heaters. Researchers there said that it’s “clear that private brand expansion is a major priority for Amazon.”

Walmart and Target have been assertive in rolling out their own in-house brands. Walmart’s city-dweller brand Jet.com has a brand aimed at the “metro millennial lifestyle,” while Target’s kids line, Cat & Jack, had an outstanding $2 billion first year on the market. Target is in the midst of introducing a dozen or so new private labels to its stores and online marketplace.

Amazon shares closed up 1.3% on the stock market today, Target jumped 3.35%, Walmart added 0.5% and Macy’s surged 3.8%.

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