Amazon Pulls Elements Private Label Baby Diapers After Only 6-Weeks

Jeff Bezos, Amazon holding a package of Elements baby diapers

In late November 2014,  #Amazon announced a major initiative when they entered the gigantic disposable baby diaper category with their own brand named #Elements. The folks at #Kimberly-Clark (#Huggies) and #P&G (#Pampers and #Luvs) were none too happy as they had been partnering with Amazon. They were caught flat footed.

On January 22, Amazon discovered they really didn't know the disposable baby diaper category well or what Mom's were really looking for. They entered with an inferior design sold at comparable prices to premium brands, a loosing formula as many players have discovered since the early 1970's when disposables really started to catch on. The list of unsuccessful brands and companies is long including J&J, Scott, Borden and International Paper to name a few.  Tom Falk, CEO of Kimberly-Clark referred to the introduction as more of a media than consumer event. 

What went wrong?  The issue was that Amazon did not create a unique and distinctive product design. The product also didn't have a brand positioning that Mom's cared much about. Mom's rated it 3.4 stars... about a point lower than Huggies and Pampers.  The bigger issue is what will the Elements brand stand for - especially across categories.  The Amazon Elements claims were:  1) premium products (they aren't), 2) Transparent origins (Mom's really aren't' that concerned - except for wipes where they want to make sure there is no alcohol) and 3) Exclusive to Prime (that means you have to pay $99 for the priviledge to purchase a sub-premium diaper at roughly a parity cost.

Having been the CMO of Huggies products (baby diapers, training pants and wipes for 5 years at Kimberly-Clark, baby diapers are one of the most competitive categories. When I took over, the CEO welcomed me saying "Welcome to the ultimate stress test". The brand represents $7 billion in sales.

Major success... then big failure in the 1970's

Lesson learned. During the 1970's, Kimberly-Clark introduced a very successful diaper brand - Kimbies - to compete against Pampers and J&J. The product initially did really well -- until they cost reduced it. Sales plummeted as mom's revolted. K-C ultimately wrote off hundreds of millions of dollars. They stuck with it however and came back with Huggies, the first diaper to stop leaks at the legs where most leakage occurs -- they invented leg elastics at the time. Within 5 years, Huggies became the #1 selling diaper. Mom's use these products multiple times a day and can easily detect minute differences and changes. Its a bit of the Schlitz beer story.

The issue with Amazon's strategy is their internal team didn't have experience with diapers or how to position them correctly. The other equally critical issue apparently was product quality and consistency. Their supplier Irving Paper has little to no consumer product marketing expertise. They have not stated what the product issues were. See test results below, conducted by Carlos Richter, industry expert.

The result was Amazon was offering a sub-premium product with no product point of difference or meaningful brand positioning and were trying to sell them at a similar price per diaper to Huggies and Pampers. Apparently product quality was such a major issue causing Founder and CEO Jeff Bezos to pull the plug after only 6-weeks.

I called Amazon to learn more and discovered that their customer service people had not yet been told about the discontinuation as of January 22.

I think Amazon will need to work with people who have hands on diaper product development and brand positioning experience and then team up with an A+ supplier. Kimberly-Clark and P&G are out because they don't manufacture private label (K-C does Costco). First Quality Products or Domtar would be logical choices.

Here is a good review of Amazon Elements baby diapers and wipes.

 
Product Bench Test Results
Carlos Richer (cricher@richernet.com)
Diaper Industry Consulting, Nonwoven and Consumer Products.
Owner of LinkedIn's largest Diaper Network, 5,875+ contacts

The following is Carlos assessment and his opinion of the Amazon Elements baby diaper based on one bag of diapers. The product tested was a size 4 diaper that was shipped to him on January 20; date code: B143031711.

• Amazon`s diapers had a high standard deviation for the centrifugal capacity, indicating a SAP (super absorbent polymer) variation between diapers as high as 1.05 grams at 1 sigma. It means some diapers had more than 2 grams variation of SAP at 95% probability (most likely within the same bag).

• Amazon`s diaper use an ADL (acquisition distribution layer) of 45 GSM, one of the lowest weights when compared with other US made diapers. As an example, Huggies uses twice as much.

• Amazon`s diaper had one of the slowest strike through times when compared to other US brands.

In Carlos opinion, the diaper is good overall, but does not support the claims of being a premium design. He believes it is similar to other private labels, but doesn’t offer a unique and distinctive point of difference.

If anyone wants to know how Amazon Elements compare with other brands, Carlos offers a full diaper performance and reverse engineering report that compares many NAFTA diapers, all in size 4 (including the Amazon Elements), and several KC`s, P&G`s brands. The cost is $99 (usually $495). Carlos is testing price elasticity.

Working to regain share

Kimberly-Clark Update - Kimberly-Clark announced on January 23, that they have been caught in a no-man's land with their Huggies Snug & Dry brand between premium Pampers and value priced Luvs/private label and have lost a reported 15% of its market share compared to 2008. In order to claw-back, they intend to enhance the value equation with a mix of product enhancements (end of Q1 on main line) and other news later in the year, promotional pricing, in-store merchandising and higher levels of ad spend. No specific details were provided, except an acknowledgement that P&G's Luvs has been promoted every week this year by at least one big retailer and has grown share by 2 points.



By Tom Wilson, Co-Founder and President of The CareGiver Partnership and Managing Partner of CenterBrain Partners, Inc., a 25-year old leading brand positioning consultancy.  I also consult in the personal care space with investment houses, equity firms, suppliers of raw materials to the industry, market intelligence firms, start-ups, manufacturers and others.  You can reach me at tomw@caregiverpartnership.com or at 920-886-8162. 

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