Amazon.com will begin selling its own brand of CE products called AmazonBasics in the US, which will give it bigger profit margins than when it sells other companies’ brands. Big-box CE retailer Best Buy recently started doing the same under the brand Insignia. Big retailers have done it for years. RadioShack has brands such as Auvio, Enercell and Optimus. Sears has sold its Craftsman (tools) and Kenmore (electrical appliances) for over 75 years.
So many CE products are made in China for what once passed as equipment makers like HP and Dell, that retailers can bypass traditional CE makers and purchase direct, cutting out the middleman. Amazon will initially offer less brand-sensitive products such as cables and blank media. It’s only a modest jump from those to higher-priced products such as TV sets (as the factory-less Vizio has successfully done) and Blu-ray players.
‘We saw an opportunity to create a line of consumer electronics basics that combine quality and low prices for an overall focus on value,” said Paul Ryder, VP of the company’s consumer electronics operations. “We drew on our history of developing other private-label brands and combined that with our mission to give customers the ultimate in selection and value. AmazonBasics is the result.’ He said the company would evaluate feedback from its customers to determine which products to offer in the future.
There’s an opportunity to provide really good quality and additional value in terms of lower prices than some other products we see in the market, he said. By sourcing products directly, Amazon can cut out the middleman and pass the savings on to customers, he said. What he’ll tell current suppliers of such products is that Amazon saw the value available and decided to share it with their customers.
Ryder said he expected to add more AmazonBasics products but that pricier gear is a ways off. Want to bet? Here’s saying there will be more AmazonBasic gear by year-end like TV sets and Blu-ray players.
Amazon.com already offers some private-brand merchandise such as kitchen and outdoor items.
Vizio, with help from gargantuan retailer Wal-Mart, has become the US’ largest TV maker without ever building a factory or developing a product. Started by US entrepreneurs, it buys all its products from various TV makers in China and has its name stamped on them. It now also offers Blu-ray players, speakers and surround-sound systems.
The New York Times reports that Amazon’s sales of media such as books, CDs and DVDs grew by only 1% in the quarter that ended in June. Video games had the biggest decline. Still, its sales of media totaled $2.4 billion for the quarter. The company expects worldwide sales on non-media products will surpass sales of media by year-end.