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Why incumbent marketplaces are launching private labels?



Once a distribution channel or hashtag#marketplace reaches a substantial scale and gains access to years' worth of consumption data, the most apparent adjacent possible for them is to introduce their own products. 



Accumulating years of consumption data provides marketplaces with an unparalleled advantage in comprehending consumer desires, emerging trends, and areas where products are lacking. Furthermore, this data aids in planning the depth and breadth of product assortments, contributing to a more comprehensive and informed strategy around brand launches.  It also facilitates right pricing of products.



Reliance Retail and Trent Ltd are actively targeting the emerging consumer group, Gen Z, through their brands Yousta, Foundry, and Zudio, respectively.


+ Reliance's acquisition of Edamamma signifies its entry into the growing market of sustainable clothing catering to kids and pre-teens.


Nykaa's introduction of clean beauty and athleisure brands targets popular market segments, while Kaybeauty by katrina kaif focuses on inclusive makeup that caters to various skin tones.



The joint launch ( or investment) of brands by marketplaces with celebrities also contributes to branding. For instance, Myntra's House of Pataudi and HRX by Hrithik Roshan & Nykaa's Kay Beauty co-launched with Katrina Kaif.



In the FY2023, Nykdd by Nykaa achieved a GMV of INR 127 crore, reaching such a scale in under 3 years. Nykdd has experienced approximately 80% full-price sales and holds the top position in the bra category on Nykaa hashtag#fashion . 20 Dresses, has also reached substantial growth, surpassing Rs 85 crore in GMV sales for FY23. Nykka's BPC & fashion brands have contributed 11.9% to its BPC GMV & 12.9% of the overall fashion GMV respectively. 



Amazon boasts over 100 own-brands spanning across various categories worldwide. In addition to their global offerings like Solimo & hashtag#amazon Essentials, they've introduced India-specific ethnic wear brands like Tavasya and Anarva.



Merely 1 percent of Amazon.com's overall sales come from its private label brands. According to a JungleScout report, 42 percent of customers who browse Amazon Essentials products eventually buy them. However, private labels concentrating on women's wear are the weakest performers in their lineup.



The drawback here is that less-established non-own brands without strong market presence or brand loyalty in a given niche lose their competitive advantage if the marketplace launches a competing brand. However, a devoted core customer base and effective branding can help mitigate this issue. Additionally, non-own brands in a specific category where marketplaces have their own exclusive labels will naturally see decreased exposure, visibility & listing challenges. Marketplaces prioritize their own brands for better commission. Hence, it has become essential for brands to explore other distribution channels and offline strategies to stay relevant.

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