Private label brands could be the next big thing for Amazon

One aspect of Amazon’s retail business that grew consistently over the years, just like the company’s stock, is its private label brands. Continuing the phenomenal growth that began more than two decades ago, from just above one dollar to the current level, the stock is trading much above the Wall Street projections.

Since the early years of Amazon, the e-commerce invasion transformed the retail space and mounting competition changed the equations drastically. Does that mean Amazon’s success story has an expiration date?

According to experts, in all likelihood, the growth saga will continue and Amazon shares will keep on hitting new highs in the foreseeable future. It is widely speculated that in the next five years, the company’s primary growth driver will be its thriving private label business.

Interestingly, Amazon’s own apparel brands are giving some tough competition to global giants like Nike (NKE) and Under Armour (UAA), and have become as popular as some of the top clothing and footwear brands. The uptrend in this segment, comprising more than 70 brands, should help the company achieve the much-needed uptick in revenue-per-customer, which is currently under pressure from heightened competition, especially in the US.

It is speculated that in the next five years, Amazon’s primary growth driver will be its private label brands

Going by the relatively faster expansion of their market share, 2018 will be a pivotal year for most of the recently-launched Amazon brands as far as growth is concerned. In other words, the company needs to streamline its promotional programs with additional stress on the Amazon brands, which still account for a meager 2% of the total units sold on the company’s website.

It makes sense for investors to keep a close tab on the company, for it is predicted that the stock will breach the $2,000-mark by 2022. So, those who do not want to miss the rare opportunity will have to plan their investments accordingly.

Meanwhile, some skeptics are of the view that it would a long time before the company fully establishes its brands. Moreover, it is feared that Amazon might have reached its peak on the sales front, and that its recent overseas investments might not bring the desired levels of returns.

However, past experiences show that the hard-core Amazon customers will not be deterred such factors, and will continue to shop with the world’s largest retailer enjoying every bit of the unique facilities it offers.

Amazon shares gained more than 40% since the beginning of 2018.