– The engine oils will be sold under the Amazon Basics brand
– Available in four flavours:
— Full synthetic
— Full synthetic (For high mileage cars)
— Synthetic blend (For high mileage cars)
– Prices appear to be only marginally less than the regular players
– Only for the US market for now
Amazon Basics sub-brand addresses the need to have a quality product at an affordable price. To make the business profitable, Amazon focuses on attaining huge volumes. The strategy targets products that are typically not that expensive, to begin with, but definitely overpriced, such as data cables, phone chargers, AA/AAA batteries, etc. So, buyers are split between coughing up the cash and taking a risk with a cheap alternative that may or may not work as intended. Almost all products wearing the Basics label are the ones with which buyers aren’t even brand conscious.
The engine oil, I believe, sits on the fence. While the big dogs do spend top dollar advertising and growing mindshare, the demand is still largely driven by the car repair shops. They’ll take whatever helps them improve their profit margins as long as it works as expected.
After trying out Motul, Bosch, Castrol, Shell (~Rs. 300/liter or higher) and the bargain basement alternatives like ACDelco (~Rs. 180/liter) I’ve found that there’s no real difference between the labels. As long as you stick with the right grade and blend (mineral/synthetic/blend), there’s no reason to splurge on a fancy bottle of engine oil. They all are probably getting the oil from the same producer anyways. After an oil change, if you find the engine smoother and quicker to rev, then it’s mostly because you removed the gunk and poured fresh oil in it.
The prices, for now, are not too low compared to the established players but that just seems to be an initial phase to warn them of what’s coming. The price war is yet to start and once it does, they’ll either have to participate or lose market share. It is, after all a byproduct produced while refining crude oil. Yes. Even the fully-synthetic engine oil is derived from crude oil but refined and treated differently to give it its unique characteristics. With the oil prices hovering around $50-60 for the sweeter Brent kind, there’s definitely money to be made selling engine oils.