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Whole Foods' brand thrives on Amazon (AMZN)

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private label perception by generationBI Intelligence

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Whole Foods' branded food items, such as canned food, frozen fruits and vegetables, and snacks, have generated $10 million in sales within the first four months of being listed on Amazon, according to a report by One Click Retail cited by Business Insider.

Whole Foods' brand, called 365 Everyday Value, grew at an average rate of 9% per week, making it the second best-selling private-label brand for Amazon. The success of 365 Everyday Value is knocking out some of Amazon’s top food brands, such as Happy Belly and Wickedly Prime. Happy Belly’s trail mix was the brand's top selling item in Q3, but it was dropped in the beginning of October when the brand repositioned to focus on coffee and spices. Meanwhile, private-label grocery brand Wickedly Prime has had lackluster growth since 365 Everyday Value items were brought onto the site.

Private labels have been a huge success for Amazon, and Whole Foods will help strengthen its portfolio of in-house brands. Amazon’s children’s clothing brand Scout + Ro posted 543% growth year-over-year (YoY) in H1, for example, while four other Amazon brands saw sales double during that period. AmazonBasics reached $210 million in sales in the first half of the year, making it the company’s most successful private label.

This success will help it fend off competition from Walmart, which has popular private brands. Walmart's CEO has previously touted the benefits of private labels, as they've positively impacted margins and helped boost customer loyalty. Walmart’s brands, such as Equate and Great Value, often outsell their respective private-label competitors, making them extremely valuable to the company.

Additionally, private labels could help Amazon build loyalty among its large millennial consumer base. More than half of millennials (58%) say they'll shop at a store because of their private-label offerings. They're also most likely to believe that private labels are the same quality and a better value than national brands. Amazon’s success with private labels just might help it maintain an edge over Walmart, which has significantly fewer millennial shoppers, and prevent it from losing these customers to its rival.

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