Brands Invent New Lines for Only Amazon to Sell. Amazon gets exclusive products, while brands receive faster customer feedback, marketing support and increased sales

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The online retail giant is asking consumer-goods companies to create brands exclusively for Amazon

By Annie Gasparro and Laura Stevens |

To build a big line of exclusive products on its site, Inc. is pushing other brand manufacturers to do most of the work.

The online retail giant is asking consumer-goods companies to create brands exclusively for Amazon after finding that developing them on its own is too costly and time-consuming, according to people familiar with the strategy.

The maker of Equal sweeteners and the nutrition brand GNC are among the first to launch products through a program Amazon started last year to outsource the work. Mattress maker Tuft & Needle also recently created a brand called Nod exclusively for Amazon.

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Amazon’s initiative is the latest example of the e-commerce giant flexing its muscles in order to offer the lowest prices and widest selection, as it seeks to cut into the market share of big-brand manufacturers.

Manufacturers generally benefit from selling their products through a range of retailers. Also, they risk cannibalizing higher-margin sales of their main brands by offering comparable products under different labels. But those entering deals with Amazon view the arrangement as a golden opportunity.

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In exchange for creating exclusive products, the brands get help launching their products on, faster customer feedback when testing new products, marketing support, and, of course, revenue from the sales. They also can appear at the top of search results—a big draw given that Amazon’s platform lists an estimated 550 million items.

“We had a lot of flexibility in terms of what we could do,” said Brian Huff, North American president of Equal sweetener manufacturer Merisant US Inc. His team created a new brand called Sugarly Sweet by Equal for Amazon.

Speed was paramount. “We had to take what would normally be 12 to 24 months of development to 90 days,” he said. However, both Equal and GNC said they have faced higher costs selling through Amazon, which can entail having to ship items in a short time frame.

“There are some kind-of-hidden expenses…so we’re trying to balance the profitability,” GNC Chief Executive Ken Martindale said on an earnings conference call in November.

Amazon, on its own, has been quietly adding to its in-house brands in recent years. Analysts estimate the site now offers more than 100. Those include the more obvious AmazonBasics brand, which makes everything from suitcases to batteries, the Happy Belly brand of foods and the Mama Bear baby-products brand.

Amazon sometimes promotes its own brands higher in search results on its site, like “Amazon’s Choice” and sponsored items, or as default results in voice searches using Amazon’s Alexa virtual assistant.

In-house brands often generate a higher profit margin for retailers, including Amazon, and can draw in customers because they can’t find those brands elsewhere. But developing a new brand and formulating products takes time.

Amazon spent several years crafting and launching brands like Happy Belly and Mama Bear. By getting other brand manufacturers to do that work, Amazon can ramp up its private-brand offerings faster and at a lower cost, people familiar with the program said.

An Amazon spokeswoman said the program offers manufacturers a way to “launch brands and products directly to Amazon customers.” Amazon is increasingly important for consumer-product manufacturers. It now accounts for roughly half of all sales online, according to eMarketer.

Selling on Amazon is “a way to contemporize our brand,” Merisant’s Mr. Huff said. Equal tends to attract older shoppers, but the new brand, Sugarly Sweet by Equal, will appeal to younger consumers because of its more modern branding and the fact that it will be sold on, Mr. Huff said.

GNC recently began selling two new brands of supplements—Informed Nutrition and Challenge—that it created exclusively for Amazon. The company is trying to make up for the loss of sales at thousands of vitamin and health-food stores in the U.S. as shoppers moved online, and Mr. Martindale, its CEO, told investors that the online recognition may drive some customers back into the retail stores.

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Amazon’s program also can be used for “orphan brands” that manufacturers have stopped selling or that never made it to market.

A coffee brand that was discontinued by a discount retailer came to Amazon through its accelerator program with the coffee beans and packaging already accounted for. Now, Amazon will have an exclusive coffee brand at virtually no cost.

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“Amazon has no issue going full-court press on private label, and pursuing all these brands. If the quality and pricing architecture don’t fit and they have to pivot, they’ll do so,” said Todd Mitchell, president of Compass Marketing Inc., which works with Amazon. “They’re not limited to the constructs of shelf space.”

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