Here's what it means: If Amazon expands the Top Brand label beyond this test to its full marketplace, it should become more attractive to both consumers and big brands, but might alienate smaller sellers.
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Amazon is testing a 'Top Brand' badge for select sellers on its marketplace (AMZN)
Companies do not pay to receive the label, which is given to popular brands and appears as a grey bar between a product's image and name and reads "TOP BRAND" in white.
Where US Amazon Shoppers Start Their Search
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- Designating top brands may drive more consumers searching for products on Amazon to make purchases.Two-thirds of US consumers who have made a purchase on Amazon in the past two years typically start their search for new products on Amazon, per a report from Feedvisor. This gives Amazon a tremendous base to win sales from but, given the number of products on its marketplace, some consumers may be overwhelmed and unable to decide. The addition of a Top Brand label could help consumers pick out products as the badge may appear as an endorsement of an item's quality.
- The new label could also make Amazon's marketplace more enticing for bigger brands that have previously chosen to avoid it.Brands like Nike avoided selling on the marketplace for many years, and while Nike eventually struck a deal with Amazon, some brands, including high-end fashion and beauty brands, are still not on the platform due to concerns about hurting their prestige and competing with resellers and counterfeits. If brands are offered the Top Brand label and given prominent placement it could alleviate some of their concerns and bolster Amazon's marketplace.
- But the Top Brand label could hurt smaller sellers' sales on Amazon's platform.Smaller sellers may have a tough time receiving the Top Brand label since Amazon's requirements appears to be obscure. Amazon told Wired that the Top Brand label highlights brands that customers love, but it didn't go into further detail about the criteria. If major brands receive the badge while smaller sellers go without, and consumers begin choosing sellers with the label on a regular basis, smaller sellers would likely see a decline in sales.
The bigger picture: This initiative could prove problematic because Amazon's business practices are under scrutiny and the Top Brand label offers further control of the competitive landscape of its marketplace.
Both the US and EU governments are investigating Amazon's business practices over antitrust concerns, and the introduction of the Top Brand label may not help the e-tailer's case.
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The new badge could give Amazon more significant influence over competition on its marketplace in this case, aiding brands that receive the label and hurting others. Given the e-tailer's huge e-commerce market share, this could bother regulators, so adding the label may boost Amazon's business with greater sales and new brands, but it might hurt it in the long run.
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