Growth in Amazon.com Inc.’s AMZN, +1.12% Solimo-labeled products is slowing down, according to Jefferies.
In a note sent to investors on Thursday, Jefferies analysts led by Brian Tanquilut said the firm’s monthly web scrape of Amazon’s private label products showed decelerating growth in the tech giant’s Solimo-branded stock keeping units. The number of SKUs increased by 3% in December, a smaller increase than in previous months, the note said. The number of SKUs increased by 6% in November, according to a note from last month.
Growth in Solimo, which makes everything from plastic cups to vitamins to melatonin tablets, a range of products traditionally found in drugstores, is slowing even though its net prices are still lower than at Walgreen’s Boots Alliance Inc.WBA, -0.45% or CVS Health Corp CVS, -0.08% , Tanquilut wrote.
That’s not necessarily a bad thing, Tanquilut told MarketWatch. It just means Amazon has likely already penetrated a lot of the non-prescription health market, he said.
“We figured Amazon was close to topping out on the health care side in terms of what they could sell without going into prescription drugs,” Tanquilut said. Amazon made a big push into the prescription drugs space earlier this year when it acquired online pharmacy PillPack.
Most of Solimo’s product growth over the last two months has been items that are not directly related to health, Tanquilut noted. New product categories enjoying growth include packaged foods, and kitchen, household and pet supplies. That includes snacks, teas, flavored drink mixes, syrups, honey, oil and sauces, along with cleaning supplies and pet food.
There’s a big market there, said Tanquilut. “We always thought Amazon would continue to find ways to expand their product categories,” he said.
Amazon shares were last down 3.9% but have gained 21% in 2018. Walgreens was down 1.55, and is down 8% in the year, while CVS was down 2.8% and is down 13% in 2018.
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