Amazon.com is preparing to battle with companies such as Walmart, Costco Wholesale and Target in the grocery aisles. The online e-retailer will expand its private label product lineup into groceries such as cereal, milk, baby food and more, said a national daily on Thursday, citing people who were familiar with the situation.
The reports said that Amazon had filed for its trademark protection in May for over two dozen different categories under its Elements brand that is already in existence, the categories included coffee, pasta, soup and household products, such as cleaning products and razors.
Amazon approached some food manufacturers who are private label to partner with them including major player TreeHouse foods. Amazon would not respond to email and phone calls to confirm or deny the reports.
The foray into the private label grocery business comes while food is becoming a much bigger business for big retailers
Groceries are able to bring in profit margins that are higher despite lower prices some retailers charge due to companies saving on their marketing costs.
Those types of in house brands are becoming more accepted with customers many of whom are looking more and more for bargains and have become more open to purchasing store brands.
One example is the Kirkland brand by Costco, which generates over $15 billion in sales from chicken breasts, coffee and an array of cleaning products.
The Elements portfolio at Amazon started last year with its line of diapers, which it since then has dropped and baby wipes that are sold only to members of its Prime program shipping service.
Amongst other things, the program offers unlimited delivery same day for certain areas and shipping two day for only an annual fee of $99.
This would be the first try for Amazon at selling a line, under its own name, of food, which is much more complex than some other products that are private label because of issues due to food safety.
In addition, Amazon will be faced with experienced competitors that have ideas of improving on their own brands.