Big consumer packaged goods brands are losing to small brands on Amazon, according to a new report from IPG’s Agentic Systems for Commerce.
The report is based on data from AI-powered analytics firm Intelligence Node, which IPG acquired last year. The report describes a new self-reinforcing system disrupting longstanding brand power dynamics between large and small brands across the CPG industry. Brand equity or recognition hardly matters these days, while speed and constant optimization reap enormous benefits for small, agile players which are outselling major brands by up to seven or eight times. The categories where big CPGs are falling behind most drastically are health care, pet health and grooming products, pantry staples, makeup, household supplies, and baby products.
“Healthcare, makeup, skincare—we see a lot of turmoil in these industries right now as they’re struggling with sales,” explained Jeriad Zoghby, chief commerce strategy officer for IPG, CEO of Agentic Systems for Commerce, and lead author on the report. “This is who’s beating them. This is who’s winning in the channel.”
In the report, Zoghby refers to small, challenger brands as an “emergent brand economy.” Within that group, sellers fall into three distinct categories: Small, digitally-native, independent brands; Amazon’s private labels; and third-party sellers.
It’s often small, third-party sellers rather than Amazon’s own private label brands or small independent brands that are taking the largest share of sales. That works well for Amazon, which doesn’t have to manufacture the products or take ownership of the inventory, but still collects a significant margin on those third-party transactions because the sellers pay Amazon for services like fulfillment, advertising, and other fees required to sell on Amazon’s platform.
