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PRIVATE LABEL STRATEGY AT AMAZON: CONFLI...

Ujjaini Basu, Suma...

Case

PRIVATE LABEL STRATEGY AT AMAZON: CONFLICT BETWEEN ETHICS, SELLER RELATIONSHIPS, AND PROFITABILITY

Ujjaini Basu; Sumanta Singha; Kiran Pedada; Ashita Aggarwal

ISB348 | Published January 16, 2023 | 10 pages Case

Collection: Indian School of Business

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Learning Objectives

The case opens with the current crisis for Amazon because of its alleged use of sensitive and confidential business information from third-party sellers on its platform to develop competing products under Amazon’s private label (PL) brands, a practice at odds with the company’s stated policy. Such allegations not only hurt Amazon’s reputation as one of the largest e-tailers but also brought to light a larger debate about the right way to launch PL brands. Although Amazon claims to have prohibited its employees from using nonpublic, seller-specific data, it agrees to have used aggregate customer data like other brick-and-mortar stores to improve customer experience. However, the third- party sellers feel that Amazon’s unfair practice of using their private information has hurt them, decreasing their return on investment and compromising their product innovations. Russell Grandinetti, who currently runs Amazon’s international consumer business, faces the following dilemma: Should Amazon continue its PL brands? Because PL brands are important for Amazon’s business, Grandinetti must find ways to build synergy with third-party retailers while developing Amazon’s PL brands. Grandinetti needs to address these concerns in the next shareholder’s meeting.

After reading and discussing the case, students should be able to • understand the differences between national and PL brands and their importance in today’s marketplace to create value, • expose the participants to the challenges faced by the sellers and the platform (or retailer) because of the launch of PL brands, and • understand how companies can launch PL brands yet manage stakeholder relationships and instill trust across the value chain.