Amazon.com Inc (NASDAQ:AMZN) has reportedly started reducing the number of items it sells under its own brand amid weak sales.
The online retail behemoth has also discussed the possibility of exiting the private-label business completely to ease regulatory pressure, according to media reports.
"We continue to invest in this area, just as our many retail competitors have done for decades and continue to do today," Amazon's spokesperson told the WSJ.
The company reportedly scaled back its private labels due to disappointing sales for in-house brands, with the company's leadership team advising the private-label team not to reorder items, as well as reduce the assortment of in-house labels in the United States by more than half, according to reports.
Dave Clark, who took over as Amazon's head of global consumer business in January 2021, reviewed the business which triggered the decision, state reports.
Amazon's house-brand business has attracted controversy in recent years, with the European Commission charging the company of using its size, power, and data to gain unfair advantage over rival merchants.
In response, Amazon has agreed not to use sellers' information for its own retail business or private label products.
Amazon reported selling more than 300mln items during the Prime Day event this year, up around 20% year on year.
However, noted UBS, Prime member count remains around 200M, little changed since the start of 2021.
"In our view, although the record 2022 Prime Day could alleviate investor concerns regarding slowdown in sales going into the event, the bigger question is around the potential impact of a slowdown," said UBS, "and for AMZN in particular, the question around costs."
For the next quarterly earnings update, UBS said the three key issues for investors are: "1) what is the 3Q guide for both revenue and operating income, 2) what is AMZN doing to reduce/rationalize costs and how long will that take, especially if the revenue growth remains tepid, and 3) will AWS top-line growth slow down if the macro outlook weakens, and if so, by how much".