Amazon.com (AMZN) is rolling out its own line of diapers and baby wipes only for its Prime members. This house brand will be called Amazon Elements.
Introducing Amazon Elements
Amazon’s new line of products will be economical and targeted at environmentally conscious parents. The exclusively-for-Prime member’s products will offer information about the materials used to manufacture it and also the place from where these were sourced. This information will be accessible on Amazon Elements product pages and via codes that can be scanned on Amazon's mobile shopping app.
According to reCode, the Elements product is approximately 19 cents cheaper than other diapers.
Amazon spokeswoman Pia Arthur revealed that the diapers are being developed by the family-owned Canadian company Irving Personal Care. On the other hand, baby wipes under the Elements brand are being manufactured by Nice-Pak Products.
Why this Move?
For a company closely linked with digital products like the Kindle e-reader and Fire tablets, diapers may seem like a bizarre selection for a novel Amazon-branded product.
If Sunny Jain, the consumables Vice President of Amazon is to be believed, this is a consumer-centric move.
With this move, Amazon might try and lure new mothers to try Prime but stay on for the more expensive tablets and HDTVs. The benefit to buy Elements products comes in addition to other Prime advantages like "free" movie and TV episode streaming, the Kindle lending library, unlimited photo storage, and free two-day shipping.
Having its own diaper line cuts down middlemen costs, thus reducing the financial pressure of selling diapers with a loss-leader pricing strategy.
This can also be seen as a strategy against its colossal suppliers—in this case, Procter & Gamble (PG) and Kimberly Clark (KMB).
It’s worth mentioning that Amazon isn’t the first retailer to go this way, Wal-Mart, Costco, and Walgreen (WAG) all stick private labels on their own diapers as well.
Amazon currently sports a Zacks rank # 3 (Hold).
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