From the outside, Amazon looked paralysed. India’s nationwide lockdown—the world’s most stringent in the fight against the Covid-19 pandemic—brought the globe’s largest e-commerce platform to an almost complete halt. For nearly two months, it was allowed only to sell essentials such as groceries.

But even as it chafed at the bit to resume operations across all its categories, it was recalibrating for a new world order. One where customers are less likely to spend big due to the worsening economic slowdown. Where items like personal protection equipment (PPE) are highly sought after. Where, perhaps most importantly, Amazon’s Chinese backbone was crippled.

The first two factors play perfectly into Amazon’s hands. Over the last five years, it has worked tirelessly to create a three-pronged private label juggernaut. It has at least eight private label brands; hundreds of made-for-Amazon brands; and its Global Accelerator The KenOf, by, for Amazon: Private labels, public consequences programme, where it taps select sellers to develop Amazon-exclusive brands, which it can later buy for a flat fee of US$10,000.

Private labels account for around 5% of Amazon’s revenue in India. This is significantly higher than the 1% contribution the company claims globally, according to Satish Meena, senior analyst at research firm Forrester. In a post-Covid world, where people are drawn less to brands and more to savings, it should be primed to grow. After all, the high-volume, high-margin private label strategy makes Amazon virtually unbeatable on price. 

Take headphones, for example. Third-party sellers usually manage a 15-20% margin on these. Amazon’s margins on its private label headphones are almost double that, while still remaining competitive in terms of price, said several sellers on the platform.