Aaron Shapiro

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The Rise of Fake Brands

September 5, 2018

Astute observers of Amazon may have noticed the rise of “Our Brands”—prominent placements of products in search results that are not the wares of third-party merchants, but of Amazon’s own private label products. They’re not just Amazon Basics, but Lark & Ro dresses, Wag dog food, Spotted Zebra kids’ garb and some 100 other private label brands. But they’re not just private label brands. With no story, heritage or named people behind them, they exist for only because Amazon decided to make a new name for a range of products, instead of calling them Amazon-made goods. They’re fake brands.

While private label brands are not unique to retail—an estimated 20% of Target and Walmart sales are private label—what is unique is the breadth and scope of an initiative that spans a large number of private label brands across a dizzying number of product categories, and the use of a naming convention that bears little, if any, connection to the parent retailer.

Contrast this approach to Costco. Costco sells private label versions of everything imaginable, all labelled Kirkland: thanks to my wife’s Costco fanaticism, my eggs and shirts are the same brand. The odd labelling works because Costco isn’t trying to fool anyone: Kirkland is obviously the house label; Costco is associated with a limited selection of high quality products at good value; so if Costco/Kirkland sells it, people are fine with it. It is not trying to pretend to be something else. Sure, I’m not going to pick Kirkland for prestige, image or cutting-edge style; only for things where I’m happy with a pure utilitarian, quality appeal. So the brand works, whether it is for gas, olive oil, luggage or golf balls.

Amazon started its private label journey with the Costco approach. AmazonBasics now sells over 1,500 products. But then, probably realizing the limits of “AmazonBasics” being associated with things like lingerie or cosmetics, Amazon rapidly diversified and created many new brands, covering virtually ever consumer category imaginable. At first, the brands were stealth; it took hunting through the trademark office or looking at the label of a shirt to figure out the brand’s connection with Amazon. More recently, brands are more prominently associated with Amazon—either notated as part of “Our Brands”, or only available to Prime Members—but one can argue that the associations are still minimal; perhaps the minimum required for Amazon to claim they’re being transparent and not duplicitous, even through most consumers likely have no idea they’re made by Amazon.

Amazon’s private label approach goes to the heart of the brand issue: what is a brand, and can a brand be manufactured out of thin air and still have value? Can a fake brand become a real brand, or for that matter, does it even matter if a brand is fake? And, at a more basic level, why do brands even exist?

Once upon a time brands did not exist because we didn’t need them. We purchased the goods we needed from the people who made them. I knew the local cobbler, trusted him, and so bought his shoes. Then mass manufacturing came about, anonymizing production. Brands filled the void by being a proxy for quality and predictability. I don’t know the people who make my shoes anymore, but I trust Frye (the oldest shoe brand in the United States) because of their boots are study, reliable and well-made. Over time, the supply of product exceeded demand, sparking the mass marketing revolution and the need to generate demand. Brands started to become more than quality markers; they were about identity. I wear Nike shoes because I like the image of myself as a fit, athletic individual, even if I don’t exercise at all. I like the dream of my future, perfect self using those super-cool-looking sneakers, so I buy them.

Enter the social internet, and all of a sudden, the most successful new brands are personal again. There may not be a local cobbler anymore, but I can read all about Tim Brown, how he comes from New Zealand and started obsessing about comfortable shoes and now we have Allbirds. The same goes with Michael Dubin, the Dollar Shave Club and his quest for the perfect, inexpensive shave; or Goop and other brands that emerge from a celebrity’s personal lifestyle and social presence as opposed to just a paid endorsement. In the new world of consumer brands, the brand is still a marker of quality, and still an image of my future self. But now, there’s an equally, if not more powerful, third component, which is a sense of belonging, resulting from the authentic connection between consumer and creator. It is a good product, check; I like the image of myself using the product, check; I’m personally connected to the people behind the product, check. Rational, emotional and spiritual fulfillment, check—so I’m sold. Everything that is that’s exact opposite of the slap-a-name-on-it-that’s-not-Amazon approach to branding.

So, we’re at an interesting moment in the world of branding. One one extreme, we have the rapid rise of Amazon’s Fake Brand ecosystem, systematically cloning everything that gets traction in their marketplace; and on the other extreme, we have brands that are as personal and authentic as they come… most of which, by the way, sell direct and are not on Amazon. Both are thriving. Then we have the legacy brands, the things in the middle, which are getting consistently squeezed: Abercrombie, Gap, Samsonite, everything that used to win at the mall. All brands that, with few exceptions, have failed to meet today’s authenticity test and so lose more and more consumer relevancy every day.

The brand battle is thus shaping up to be a battle of scale versus authenticity. Can a modern, authentic brand sell direct and reach enough scale to thrive-long term and withstand competitive pressures? Or do consumers buy Amazon because they’re locked into Amazon, and over time Amazon’s brands become more authentic and loved? And in the middle, can legacy brands become authentic and relevant fast enough to succeed in the D2C world before they get squeezed by Amazon and the startups?

One day, Lark & Ro will stop becoming fake and either mean something, or Lark & Ro will cease to exist, trumped by a brand that’s truly authentic from the ground up. Which way that story unfolds is the true test for Amazon and anyone playing in the consumer brand space.