Aggressive Amazon tactic pushes you to consider its own brand before you click 'buy'

Amazon has introduced a feature that pitches its own private-label brands right before customers add rival products to their shopping carts, illustrating the e-commerce giant's power on the country's dominant online retail site.

In dozens of product searches by The Washington Post, offers for a “Similar item to consider” featuring Amazon brands appeared just above the spot where shoppers click to add an item to their cart. Those boxes touted a lower price for Amazon's versions of items such as Glad trash bags, Dr. Scholl's gel insoles, Energizer batteries and Nicorette gum.

The tactic shows the influence that Amazon can wield over what's sold on its site, which research firm eMarketer expects to account for 37.7% of all e-commerce sales in the United States this year.

“It's an ad at exactly the moment the customer is ready to buy,” said James Thomson, a former senior manager in business development at Amazon and now partner at brand consultancy Buy Box Experts. “I don't see how that's not unfair.”

(Amazon chief executive Jeff Bezos owns The Washington Post.)

Amazon said the product promotion isn't very different from the ways other stores hawk their private-label goods.

“Like any retailer we promote our own brands in our stores, which provide high-quality products and great value to customers,” Amazon spokeswoman Nell Rona said. “We also extensively promote products from our selling partners.”

Amazon's sprawling marketplace has become the default location for consumers to re-up on goods as basic as paper towels and socks. According to analyst estimates, about half of all American households are now Prime members, turning to mobile apps, desktops or even the Alexa voice-enabled application for much of their shopping.

Despite Amazon's huge selection, most shoppers make up their minds about what products to buy with just a glance or two. About 90% of shoppers who make a purchase on Amazon select the option on the page to “add to cart” or “buy now,” rather than scrolling below that to choose an offer from other sellers, Thomson said. Amazon has turned much of the site's premier space over to brands and rival third-party sellers for advertising, which generated about $3 billion in revenue last quarter.

At the same time, the company has developed more than 100 in-house labels — including its popular AmazonBasics — hawking items including bras, vitamins and floor mats for cars. Those private-label brands already occupy prime real estate on the site. This new addition places them in more direct competition with other brands and sellers at the moment a customer decides to buy. And in The Post's test of the feature, only Amazon brands are offered in the choice location.

Rona declined to say whether Amazon is testing the feature or whether it's permanent. She also declined to say how many products Amazon targeted with the “Similar item” promotion or whether any non-Amazon brands were included.

The inherent competition between Amazon and those who sell on its platform has already drawn regulatory scrutiny. European regulators announced an investigation into Amazon's competitive tactics, specifically saying they will look into whether the company is misusing its dual role as both a marketplace for independent sellers and a retailer of its own products.

Regulators and lawmakers in the United States are also looking. The Federal Trade Commission in June took on responsibility for investigating Amazon, a move that could presage a ramped-up inquiry into the company's competitive tactics. And the House Judiciary Committee grilled Amazon attorney Nate Sutton last month, pressing him with questions about conflicts with third-party sellers.

Providing customers with the lowest price for products could help Amazon defend itself against unfair-competition claims, since U.S. antitrust law often focuses on consumer harm.

Amazon's latest tactic offers AmazonBasics batteries to shoppers searching for Energizer models, its Trek Support gel insoles to customers searching for Dr. Scholl's products, and its Basic Care nicotine gum to those searching for Nicorette's offering. The Post also found examples of Amazon offering its private-label products as alternatives to diapers, coffee pods, beauty products and vitamin supplements, among other items.

The feature doesn't appear for every customer. But when selected shoppers search for “Glad tall kitchen drawstring trash bags,” they'll see links for Glad products. One of the top non-sponsored listings Monday, for a 100-bag package of Glad trash bags for $16.77, includes the suggestion to choose an 80-bag package of Amazon's Solimo tall kitchen drawstring trash bags for $11.11 instead.

Amazon's own brands are among the most profitable items the company sells, said Elaine Kwon, founder of e-commerce management and software firm Kwontified and a former fashion vendor manager at Amazon.

“It makes sense to me that they are trying to achieve complete market dominance of their private-label products on the platform,” said Kwon, adding that the company is unlikely to alter its approach unless regulators require it.

A spokeswoman for Clorox-owned Glad, Aileen Zerrudo, said, “We trust that consumers who love Glad trash bags will continue to choose our brand.”

Energizer and Dr. Scholl's representatives declined to comment. A Nicorette representative didn't respond to a request for comment.

Amazon has previously experimented with aggressively pitching its own products. Earlier this year, the Wall Street Journal reported that Amazon ran a similar experiment in its mobile app. That test, which Amazon ended, pushed pop-up windows that took over much of a product page on shoppers' phones, forcing customers to either click through to the lower-cost Amazon products or dismiss them before continuing to buy. CNBC has reported that Amazon removed some of its promotional private-label brand placement earlier this year.

In addition to giving its private-label products a boost, the tactic appears to give Amazon's retail sales operation an advantage over merchants that sell their own goods on the site. The company has said that third-party sales hit $160 billion, or 58%, of its total revenue from selling physical, rather than digital, retail goods.

But Amazon is the only company that sells its own private-label brands. So the advantage is even greater for Amazon when it persuades customers to buy its own branded items over similar products sold by third parties.

Common Cents Distributors, a New Jersey merchant, recently had the top buy-box listing for a 64-ounce bottle of Wesson canola oil, for $14.48. But Amazon suggested a four-pack of its own Pantry Pro canola oil eight-ounce spray cans, for $11.99, immediately above the “buy now” button on the page.

“It takes away from our sales, 100%,” said Sebastian Cwik, Common Cents Distributors' chief executive. “It's definitely not cool.”

Cwik noted that Common Cents has few alternatives. The company generated $30 million in sales last year, 98% of that from Amazon. Shifting to rivals such as eBay or Walmart would eviscerate his business, Cwik said.

“Where do you draw the line of [Amazon] being a marketplace and a company pushing its own business?” Cwik said. “There's nothing we can do but just hope governments get involved.”