Amazon Tests Pop-Up Feature Touting Its Lower-Priced Products

Date : 03/15/2019 @ 1:43PM
Source : Dow Jones News
Stock : Amazon.Com, Inc. (AMZN)
Quote : 1764.77  -54.49 (-3.00%) @ 11:59PM
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Amazon Tests Pop-Up Feature Touting Its Lower-Priced Products

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By Jay Greene 

Amazon.com Inc. tested a pop-up feature on its app that in some instances pitched its private-label goods on rivals' product pages, an experiment that shows the e-commerce giant's aggressiveness in hawking lower-priced products including its own house brands.

The recent experiment, conducted in Amazon's mobile app, went a step further than the display ads that commonly appear within search results and product pages. This test pushed pop-up windows that took over much of a product page, forcing customers to either click through to the lower-cost Amazon products or dismiss them before continuing to shop.

When a customer using Amazon's mobile app searched for "AAA batteries," for example, the first link was a sponsored listing from Energizer Holdings Inc. After clicking on the listing, a pop-up window appeared, offering less expensive AmazonBasics AAA batteries.

The limited experiment, which ended last week, highlights the power Amazon holds over brands on its home turf. In its quest to offer the best selection at the lowest price, Amazon has created more than a hundred in-house brands, from batteries and trash bags to nutritional supplements and furniture.

Amazon's private-label brands have chipped away at market share in some categories, such as batteries, and the company actively advertises its products throughout the site. Consumer-product manufacturers have found Amazon increasingly important because the website accounts for roughly half of all U.S. sales online.

The test, which didn't appear on every customer's mobile device, ran on top of both sponsored and non-sponsored listings. Amazon also said it pitched lower-cost alternatives from other brands, but it didn't specify which ones.

Amazon said the pop-up windows weren't ads, but rather a test of a feature to help shoppers find cheaper alternatives. The group that developed the test was from Amazon's retail business, not its advertising operations. The company declined to discuss the results of the experiment.

"We regularly experiment with new shopping experiences for customers, and this was a small test," the company said. "The similar, lower-priced product options shown to customers featured relevant items from a range of brands on our website and were displayed when a customer clicked on any type of listing."

The Wall Street Journal last week conducted dozens of product searches in a variety of categories in the mobile app, clicking on the first several products listed including those from Amazon. The Journal found three instances of the pop-up ads, which took up about half of a nearly 6-inch iPhone screen and which all touted Amazon products on rival pages. The ads didn't show on several other phones tested under different user accounts.

One company whose sponsored-listing page was targeted, Nested Naturals Inc., only found out about the test through social media, its co-founder and chief marketing officer, Kevin Pasco, said.

Before mobile shoppers included in the experiment could buy Luna sleeping pills from the Vancouver-based supplement company for $21.95, they were offered a pop-up window hawking an $11.99 vial of melatonin pills from Amazon Elements. The pop-up included the tag "Similar item, lower price" with a link to the Amazon product.

Mr. Pasco described the tactic as "sneaky," though he said building a business on Amazon requires "having a stomach of steel and taking whatever they throw at us."

Nested Naturals sold about $10 million of its supplements on Amazon last year, roughly 85% of its business, he said. That makes it easier to roll with Amazon's efforts to compete against Nested Naturals, Mr. Pasco said. The experiment, he added, had no discernible impact on Luna sales.

"We try to be a little less emotional and say this is Amazon being Amazon," Mr. Pasco said.

In the Energizer example, Amazon's pop-up appeared in a sponsored listing for a 24-pack of MAX Premium AAA batteries priced at $12.14. The rival 36-count AmazonBasics batteries cost $8.99.

An Energizer spokeswoman declined to comment.

Another target of Amazon's test was Clorox Co.'s Glad Products Co. and its 110-count of tall kitchen trash bags for $19.06. The pop-up touted Amazon's Solimo bags for $14.49. A Clorox spokeswoman didn't respond to a request for comment.

Like many big-box retailers in physical stores, Amazon is taking premium space to sell its own generic products. But unlike placing generic acetaminophen on a shelf next to Tylenol, Amazon's test forced consumers to dismiss the option of viewing alternatives before they could continue with a purchase.

Amazon declined to say if it notified the advertisers when the test usurped sponsored listings or if it refunded sponsored-ad payments.

The company is increasingly finding ways to monetize the space on its website, especially as it forges deeper into the advertising business. Shoppers are encountering a variety of sponsored ads, whether at the top of search results with sponsored listings that look similar to regular listings, or within product pages in a number of formats.

Last fall, The Wall Street Journal reported that Amazon for more than a year wove sponsored product listings from Johnson & Johnson and Kimberly-Clark Corp., onto consumers' baby registries that led some shoppers into believing the new parents had chosen the items. Amazon said it has since phased out the sponsored listings on the baby registries.

Amazon's sales of private-label goods on its website received increased scrutiny last week when Sen. Elizabeth Warren, a Massachusetts Democrat running for president, proposed banning large companies from participating in the platforms they have created. She specifically called for splitting AmazonBasics from the company's marketplace business.

Write to Jay Greene at Jay.Greene@wsj.com

 

(END) Dow Jones Newswires

March 15, 2019 09:28 ET (13:28 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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