Amazon cuts several private label brands as part of broader cost reduction efforts

Amazon is streamlining its private label brands as part of a larger initiative to control costs, according to confirmation from the company provided to CNBC.

In addition to the wide range of products sold by third-party sellers, retailers, and well-known brands, Amazon also offers its own in-house goods, similar to store brands. Over the years, the number of Amazon’s private label brands has grown rapidly and includes lines such as Goodthreads apparel, Rivet furniture, Presto paper towels, and Amazon Basics batteries.

Matt Taddy, vice president of Amazon Private Brands, stated that the company has made the decision to eliminate certain in-house products after finding that they did not resonate with customers.

“We always prioritize our customers’ preferences, and through this process, we have realized that our customers gravitate towards our flagship brands – such as Amazon Basics and Amazon Essentials – which offer high-quality products at great prices,” Taddy said.

The exact number of private label brands being discontinued by Amazon was not disclosed. However, according to a report from The Wall Street Journal, dozens of brands are expected to be discontinued, leaving Amazon with fewer than 20 in-house brands.

Amazon is primarily reducing its apparel and furniture brands, with some products remaining on the website until they are sold out, as reported by the Journal based on insider information. This move is part of Amazon’s broader cost-cutting measures, as well as a pre-emptive response to a potential antitrust lawsuit from the Federal Trade Commission.

CEO Andy Jassy has been actively implementing cost-saving measures across the company as Amazon navigates an economic downturn and slower revenue growth. Jassy has reviewed and scaled back some of Amazon’s riskier ventures, such as grocery and devices, while implementing a hiring freeze and slowing down warehouse expansion. Recently, the company announced the largest job cuts in its history, resulting in 27,000 layoffs.

Amazon’s private label business has faced scrutiny from antitrust regulators after allegations surfaced that Amazon executives misused merchant data to develop competing products. Brands have accused Amazon of imitating their products and pricing them in a way that makes it difficult to compete.

These concerns were highlighted during a 16-month investigation by the House antitrust subcommittee into competitive practices at Amazon and other major tech companies. When questioned about these allegations, Amazon founder and then-CEO Jeff Bezos stated, “We have a policy against using seller-specific data to benefit our private label business, but I cannot guarantee that this policy has never been violated.”

The Federal Trade Commission is reportedly preparing to file a long-awaited lawsuit against Amazon as early as this month. The agency has been investigating Amazon on various fronts, including allegations of leveraging its retail dominance to stifle competition from third-party sellers.

According to Amazon, sales from private label brands account for only 1% of its total retail sales. As of 2019, the company reported 158,000 private label products across 45 brands, in addition to the brands sold through its online grocery service, Amazon Fresh.

WATCH: Explore how Amazon’s extensive private-label business is expanding and forcing smaller brands to protect against counterfeits.