Amazon (NASDAQ:AMZN) grabbed the headlines again last week with the roll-out of a new line of private-label skin-care products, giving a jolt to the already-climbing shares. And while AMZN stock has pretty much traded in line with the market since the news, investors are wondering if it’s worth factoring in to the e-commerce giant’s long-term growth story?

The short answer: Probably not. But AMZN stock watchers should pay attention to the halo effect of the new line of private-label skin-care products called Belei. Amazon rolled out a handful of items including face masks, moisturizers and serums — all of which can be purchased for less than $40.

The key reason Belei has gotten so much play in recent days is that online beauty brands are having a moment in the sun right now. According to AI-powered ad and brand analyst Feedvisor, beauty and personal care is the most-popular product category for habitual online shoppers. As several direct-to-consumer beauty brands have become wildly successful over the past year, many see the new beauty brand as a way for Amazon to grab a piece of that pie.

Belei Belies the Hype

Contrary to popular belief, just because Amazon builds it, doesn’t mean they will come. The “digital native” brands that Ulta Beauty (NASDAQ:ULTA) credits for driving store traffic have a few big advantages over Belei. For one, Kylie Cosmetics, a huge seller for Ulta, has star power, fueled by founder Kylie Jenner’s 130 million Instagram followers, a marketer’s dream. 

But even brands like Morphe that don’t have a famous face have an advantage: people can see and try them in-store. Without physical locations, Amazon may struggle to find buyers who can’t see, smell and try the products before purchasing them.

Private Labels in Perspective

There’s another reason I’m dubious about the impact Belei will have on Amazon stock over the long term — AMZN private labels haven’t performed. There’s been a lot of talk about Amazon’s push into in-house products and how they will disrupt other brands sold on the platform, but so far there’s very little evidence that Amazon’s private labels are anything more than a drop in the bucket to the retail universe. 

Many point to the huge success that Target (NYSE:TGT) has had with its in-house brands, but AMZN hasn’t been able to replicate that. All of the puzzle pieces are there — a huge pool of consumer data, a platform that has become synonymous with online shopping and a boatload of consumer trust — but unfortunately they don’t quite add up the way many were hoping. 

When you remove Amazon electronics like the Kindle and Echo as well as Whole Foods’ private labels, AMZN’s 400-plus exclusive brands delivered less than $1 billion in sales in 2018. That’s negligible when you consider that the firm’s retail sales were upwards of $122 billion last year.

Of that tiny sliver, more than half of the private-label sales came from AmazonBasics, a generic, no-frills line that includes everything from kitchen appliances to electronics. 

There’s an argument to be made that the line of skincare items is part of a larger trend and that Amazon is going to start pushing its private labels harder. However, even if the e-tailer does eventually follow in Target’s footsteps, it’s not going to have a tangible impact on AMZN stock’s performance any time soon. 

Bottom Line for Amazon Stock

The Belei line isn’t bad news for Amazon stock by any stretch of the imagination, but it certainly isn’t a reason to add AMZN to your portfolio today. Over time, these private label brands have potential to grow, but for now they’re nothing to get excited about.

After bouncing back from January lows near $1,500, AMZN stock looks expensive at the moment. Since the firm is constantly in the news, it’s likely to see a pullback at some point over the next few months. Right now, I’d hold on to existing Amazon shares, but I wouldn’t pick up any new ones until the price moves lower. The next major catalyst for AMZN stock will be a tangible step into the health care space, but until then, investors should be careful not to buy into the hype. 

As of this writing, Laura Hoy was long AMZN.