Should Store Brands Be Outlawed?
Senator Elizabeth Warren is running for president and the cornerstone of her campaign is a promise to breakup Amazon. She would introduce legislation that would make it illegal for retailers like Amazon to sell their own “store brands”. If successful, Senator Warren’s proposal would disrupt thousands of retailers like Best Buy, Walmart, and Vicente’s Tropical Grocery who sell their own products side-by-side with national brands in both their online and brick and mortar stores.
I’m not sure how often Senator Warren does her own grocery shopping, but given this proposal I have a feeling it has been quite a few years since she shopped for mayonnaise at Kroger. Perhaps she’s just not familiar with the concept of a “store brand”. To call store brands “anti-competitive and monopolistic” seems be a bit farfetched — but that’s just what she said in her latest post on Medium where she explains why she’d like to breakup Amazon,
Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version.
While Amazon is an innovator they should not get the credit for inventing “store-brand” products. Almost every retailer has one or more lines of private label products. For example, Best Buy sells hundreds of electronic products under more than five house brands (Insignia and Dynex televisions, Rocketfish video cables, Geek Squad flash drives, and Init electronics cases and accessories to name a few). Walmart competes against major brands in every single category with more than a hundred of their own store brands. Most grocery stores like Kroger, Safeway, and Tom Thumb reserve their best shelf space for their own store brands.
Costco is the world’s largest wine retailer selling almost $2B worth last year alone giving them MASSIVE leverage with producers and distributors unlike any of their competitors. They also make their own wine and sell it under their store brand — Kirkland. Should we “breakup” Costco for selling too much wine (including their own brand)?
What is so different about Amazon selling their own brand of HDMI cables and Best Buy selling their own brand of Televisions? Store brands give consumers more choice as they have the option of paying more for a national brand or less for a store brand. Do we need Senator Warren’s help in this matter? Do we need for her to outlaw store brands? I don’t get it. Perhaps Senator Warren should spend her time trying to fix things that are really broken — say something like healthcare or immigration?
About The Author
Alexander Muse is a serial entrepreneur, author of the StartupMuse, contributor to Forbes and managing partner of Sumo. Check out his podcast on iTunes. You can connect with him on Twitter, Facebook, LinkedIn and Instagram.