Monday, February 6, 2023

Amazon Private Brands: Self-Preferencing vs Traditional Retailing

Amazon Private Brands: Self-Preferencing vs Traditional Retailing

Jean-Pierre Dubé

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Marketing Science Institute (MSI)


Competition authorities and various digital platform regulations apply a double standard in their criticisms of Amazon's private brand programs. Amazon's private brand practices mimic those used by established retailers for decades. Comparably-sized retailers have orders-of-magnitude larger private brand practices, use granular customer-level data and, in some cases, are considerably more vertically-integrated even to the point of owning the entire production and supply chain. Many established retailers explicitly self-preference their private brands and often use trade dress on their products that mimic the leading branded competitors. In short, regulations of Amazon's private brands would need to apply to the private label practices of all retailers to avoid a double standard. Given that private brands create value for consumers, such regulations could have the unintended consequence of reducing consumer welfare.

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