AmazonBasics: A New Player in the Oil Market?
By now you may have heard about AmazonBasics, the new engine oil brand available on, you guessed it, Amazon. First introduced in late July and prominently featured on Amazon’s oil page, AmazonBasics is a synthetic engine oil with API SN Plus and GF-5 credentials. It comes in three viscosity grades: SAE 0W-20, SAE 5W-20 and SAE 5W-30. In addition, it carries dexos1 gen 2 approval. It is featured with the big names (Pennzoil, Mobil1, Castrol, etc.) in synthetic engine oil marketing.
Although marketed as AmazonBasics, this product is actually a rebrand from Warren Distribution in Omaha, Nebraska. The concept of private label rebranding is widely used in oil marketing when a customer needs an oil but doesn’t have the manufacturing and other capabilities required or has a sales volume which is too small to justify a commitment to blend internally. Many companies, even majors, use private label to improve their position in the marketplace.
In the case of AmazonBasics, Warren blends the oil with a generic additive system and base stock mix that meets industry requirements. They can blend, package and ship any oil brand. They also are able to offer artwork capabilities to help design labels, as well as advise on point-of-sale and other marketing and sales materials. That includes any regulatory help needed.
This is just the latest in the growing trend towards online sales. In the four years from October 2014 to October 2018, online sales as a percentage of retail sales has gone up by nearly 50 percent. Amazon is the No. 1 online retailer, so it is obvious they are reaching across the marketplace to find new ways to increase market share. Sales of automotive oil products (engine oil, transmission fluids, gear oils and other fluids) have historically hovered around one billion gallons annually.
Without any advertising, and strictly on price, AmazonBasics has gotten some attention. Customer ratings on the internet indicate there is general satisfaction with the product, but primarily based on price. Detractors say it is just Wal-Mart oil with a different name. There are no real technical issues to raise.
The label copy for AmazonBasics says it is formulated for longer drain intervals, reduces the likelihood of low speed pre-ignition and reduces friction for better fuel economy and reduced wear. It is resistant to viscosity and thermal breakdown and has low volatility to minimize deposits and emissions. It is approved for dexos1 gen 2, API SN Plus and ILSAC GF-5. It is available in five-quart jugs or six-packs of one-quart containers.
From a brief look at the commenters, it looks as though the primary buyers for oils on the internet (including Amazon) are D-I-Yers. The DIY market once dominated oil sales, but times have changed. Now, most people are content to be D-I-F-M. The DIFM market doesn’t usually go to a big box store to buy oil. They often rely on distributors and majors to supply them with the necessary oils for their operations.
The biggest issue with shipping oil is the weight. Orders can be placed online and picked up at a distribution center, if Amazon has them. It would probably take about 15 regionally placed to cover the country effectively. It’s not clear what Amazon will be doing since they do not have that many established warehouses throughout the country. As of press time, Amazon Prime members get free-two day shipping.
So the question is, whether or not AmazonBasics’ motor oil line will be the next big win from Amazon. Only time will tell.