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Amazon Wants To Diaper Your Baby (And Why You'll Let Them)

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Amazon has launched a new brand of diapers and baby wipes, called Amazon Elements, and the program positions the online retailer to once again batter discount, grocery and drugstore chains with the kinds of lower-priced staples that keep shoppers coming in.

Elements are priced at roughly 19 cents cheaper than other diapers, according to reCode, and anyone with a baby can tell you just how much that will save over the course of that child’s diaper-wearing years.

And Elements are only available to Amazon Prime members, offering yet another reason to sign up and pay for the service.

This isn’t Amazon’s first private-label product, the Kindle and Fire electronics lines count as store brands, but private-label consumables — goods used by consumers that require frequent replenishment like cleaning products, household paper goods and diapers — are the cornerstone of online replenishment programs. Sign up for a membership, enter a time frame  for the next shipment and the items land on your doorstep.

Baby items are among the most frequently used consumables, and used by a demographic that is the most price sensitive and more likely to shop online: young mothers.

Discount retailers and even drugstore chains offer store brand versions of these items at compelling price points, but brick and mortar retailers have a conflict that keeps them from heavily promoting these goods or seriously undercutting pricing on the national brands: retailers rely on vendor partners for all sorts of financial support. Co-op advertising dollars from Pampers and Huggies help offset the costs of circulars, the coupons drive traffic into stores and the vendors own national ad campaigns often feature retail partners to help secure in-store display space.

Co-op dollars are the dirty little secret of retail, and something not all consumers are aware of. Every time you see an ad for a brand name product in a weekly circular, a full-page ad or a commercial, it is paid for in part by the vendor.

Co-op dollars sometimes go into a general slush fund to be used as the retailer sees fit. It’s legal, and while a benefit to the retailers financially, it sometimes keeps them from promoting store brands by anything other than a lower price and an adjacency to the national brand.

Grocery stores and drugstores also charge slotting fees where brands pay for shelf placement or premium space such as end caps in high-traffic areas. To devote that space to a store brand means giving up that rental income.

Amazon doesn’t have those barriers, doesn’t rely on co-op dollars or slotting fees. It doesn’t even mind undercutting its own marketplace sellers -- which includes branded diapers -- by changing the prices on Amazon supplied items to quickly match and beat those of its own retail members.

Diapers may seem a small brand extension for Amazon, but it’s a pretty genius move for the retailer. These baby products add another reason for shoppers to sign up for Amazon Prime. Not that Transparent isn’t reason enough, but getting a monthly delivery of diapers and wipes is a great benefit to a group of consumers who are likely to then buy a lot more of their household and baby goods from Amazon.

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