Amazon Challenges Its Own Merchants With New Line Of Baby Products

Amazon.com

Amazon is already in the e-commerce business, the hardware business, the entertainment business. Heck, it’s even dabbling in the drone business. Now, the company, which started as no more than an online bookstore, is trying its hand at a new and altogether unexpected line of business: diapers.

Yes, on Thursday, Amazon rolled out a new line of diapers and baby wipes called Amazon Elements, which the company promises will be heavily dictated by customer reviews and be highly transparent about what materials are being used. Compared to the other industries Amazon is competing in, diapers can seem like a fairly small thing, and yet, this move signals a much larger shift for Amazon, because Elements positions Amazon as a competitor to some of the very brands who sell their goods on Amazon. If Amazon were to expand that approach to other consumer products, it could be very bad news for the millions of merchants who treat Amazon as their own storefront.

This wouldn’t be the first time Amazon has competed with its own vendors. Devices like the Fire TV and Fire TV stick go head-to-head with other smart TV products, as does the Kindle Fire with other tablets. Meanwhile, Netflix runs on Amazon’s cloud service, even though Amazon Prime Instant Video is a direct competitor to Netflix. And yet, Elements extends this battle beyond the realm of tech giants battling tech giants. Here, Amazon will face off against major consumer products companies like Kimberly Clark, maker of Huggies, and Procter & Gamble, which manufactures Pampers.

There’s good reason to believe this approach could spread well beyond diapers, too. Last year, AllThingsD reported that Amazon had posted several job listings for roles that had to do with “private label consumables,” or products you might find in the average grocery store.

For Amazon, it makes sense. The company already has control over the online store, many of the devices from which you access that online store, and the delivery of those items. It only stands to reason that it would want some control over the actual products we’re buying, as well. And, by selling replenishable products, like diapers, it would give shoppers more incentive to sign up for Amazon Prime free shipping. And once you’re a Prime member, it becomes that much easier to buy other items through Amazon as well. It’s all in the service of keeping customers within the Amazon ecosystem and offering them a shopping experience – and now, products – they couldn’t find anywhere else.

But all that could come at a steep cost to the merchants and brands who have helped build the company into the e-commerce giant it is today. If Amazon wants its marketplace to remain as strong as ever, the company would be wise not to anger its multibillion dollar partners too much. Conglomerates giveth, conglomerates taketh away.