Amazon.com (NASDAQ:AMZN) now has its own store brand. The old bricks-and-mortar retail industry is passing on another trick to the new online retailing sector.
Yep, just like Wal-Mart Stores (NYSE:WMT) has its "Sam's Choice" line of groceries and Sears Holdings (NASDAQ:SHLD) sells rebranded household appliances under the Kenmore name, Amazon now has its own brand name for low-priced, generic items.
The online store's first house-branded items are a bunch of blank CD and DVD discs, and a handful of cables for your electronics. In each case, the AmazonBasics product is simple, plainly designed -- and significantly cheaper than big-name alternatives. Amazon will still sell you a $200 Monster Cable HDMI connector for your high-definition TV, but you could also get an $8 cable from AmazonBasics. Best Buy (NYSE:BBY) has a basket of store brands for electronics, too, but the GeekSquad HDMI cable seems aimed at a different demographic and sells for about $90.
Online shoppers are often drawn to outlets like Amazon and Overstock.com (NYSE:OSTK) by the low prices to be found there. Amazon just upped the ante on that value proposition, albeit in a very narrow niche of its massive catalog. If the AmazonBasic cables and discs sell well, I'd expect Amazon to move into other product lines. Why should Sony (NYSE:SNE) and Panasonic (NYSE:PC) have all the fun and profits in categories like TV sets, Blu-ray players, and audio receivers?
We don't know much about who makes the cables, or what Amazon's gross margins might be on these sales. But it's a great way to raise the company's profile and strengthen the deep-value business case. Even if Amazon doesn't end up making huge profits from direct sales of these products, it's a smart branding move.
Would you buy AmazonBasic cables? How about a cheap TV? And if the stuff Amazon sells is so cheap, how come the stock is not? Let us know in the comments box below.
