What CPG Brands Should Know About Amazon's Grocery Operation
Breaking News: AmazonFresh (and Prime Pantry) available in Sponsored Products
Did you know that groceries are one of Amazon’s fastest-growing categories?
Just as groceries have fueled Amazon’s growth, ecommerce sales have also been responsible for 90% of the growth in the CPG industry since last year.
Faster delivery and expanded offerings through Amazon Fresh and Amazon Pantry have improved the customer experience and opened a window of opportunity for CPG brands to grow their business through Amazon’s grocery channel.
“In many markets the online model, more accurately the online plus offline model, has the potential to offer better value to shoppers — on price, convenience, and choice.”
-Peter Freedman, Managing Director at The Consumer Goods Forum
Amazon Grocery Market Share An Opportunity For Brands
Amazon has expanded its market share of all online groceries to 18% since 2017, making it the leader in an industry projected to reach $100 billion by 2022.
There is more opportunity than ever before for CPG brands, especially those that serve niche or local products, to expand their customer base across through Amazon.
Not only do consumers prefer Amazon’s Marketplace for convenience and lower price points, but Amazon also delivers on the most important factor that impacts consumer grocery purchases: faster delivery times.
Customers Crave Faster Delivery
Delivery times are a differentiator for customers, especially when it comes to groceries and CPG products.
A staggering 61% of grocery shoppers said that same-day delivery would increase their loyalty to a particular retailer, according to new research by eMarketer.
While Walmart and Target have both improved their grocery shipping offering to include store pickup and same-day delivery, Amazon is the only grocery giant to offer something even better: two-hour delivery in many major cities with Amazon Prime.
Customers that shop products from Whole Foods, Amazon Fresh, and Amazon Pantry can literally order their groceries in the morning and have them arrive on doorstep by lunch time.
Brands that can launch and distribute their CPG products through Amazon Fresh and Pantry will be able to leverage faster delivery times that customers are starved for.
Amazon Fresh & Amazon Pantry
Here’s a quick look at Amazon’s grocery and packaged goods services that over 100 million Prime subscribers can access.
What is Amazon Fresh?
Amazon Fresh delivers groceries to customers’ doors and also provides a pickup service from select retail locations.
Although the number of cities within the service areas is somewhat limited, they are high population locations that are great for offering widespread exposure to a potential Amazon seller and their products.
“Consumers are looking for greater convenience, flexibility, and customization for their shopping experience while also being cost sensitive, and all of those needs can potentially be met through ordering online. Amazon’s doing this better than all other competing platforms.”
– Leanna Kelly, Growth Marketing Manager at CPC Strategy
What is Amazon Prime Pantry?
Amazon Pantry is an additional subscription service Prime members that offers food, groceries and household items with expedited shipping.
According to Amazon itself, members save about $83 per year in shipping fees if they use the program at least once per month.
Prime Pantry also offers exclusive coupons, deals, and promotions just for members.
Amazon Pantry includes packaged food, beverages, household items, cleaners, pet supplies, health products and more. There are even toiletries, beauty products and grooming supplies as well.
Prime Pantry’s baby care section is a big hit with families, too, offering serious deals on diapers (especially if you use Subscribe & Save).
There are also toys, baby proofing products, sippy cups and just about anything your kiddo might need on a moment’s notice.
Prime Pantry has spearheaded Amazon’s double-digit growth in personal care, baby, and packaged food items.
CPG Brand Management On Amazon
If you’re a vendor and meet the requirements, you can apply for Amazon Fresh here.
Applying for Amazon Pantry is a little more ambiguous, and will require you to reach out to your Amazon Vendor Management to start the process for getting your products eligible for Prime Pantry.
Amazon Fresh Vendor Requirements:
• Products must have a unique UPC for each variation/product
• Products should have e-commerce friendly packaging
• Meat, Seafood, and/or Prepared Food items must be available pre-packaged and by net weight
• All vendors must be prepared to provide product liability insurance
Food Safety Specific Requirements:
• Vendor should have a current GFSI Certification, otherwise an Amazon Food Safety audit must be conducted
• Products made in the USA should be produced in FDA or USDA licensed and approved commercial manufacturing facilities
• Products made outside the USA should be produced in commercial manufacturing facilities that follow FDA or USDA regulations
According to Amazon, once an application has been completed and submitted, the Amazon Fresh buying team will review it to determine which program and category your product(s) falls within.
You can expect a response to your application once reviewed by Amazon’s team. Providing complete and accurate information in your application will help to expedite the process.
Pro-Tip: If your products are currently available on Amazon, you will need to submit a separate application to become a vendor on AmazonFresh.
Even if you aren’t eligible for Amazon Fresh or Pantry, you can still sell your CPG products on Amazon.
Why Perky Jerky Sells (And Wins) On Amazon
Perky Jerky may have started as a brand solely focused on physical retail, but learned that they would needed to be on Amazon to reach customers that they couldn’t in-store.
“The way people shop is changing,” says Patrick Bernard, Director of Ecommerce at Perky Jerky. “Those who fail to change are doomed to wither on the vine.”
“The team made substantial investments into the digital space to ensure that we meet our customers wherever they’re shopping — especially online.”
“Our digital machine is a cash-positive marketing vehicle that will serve up 93mm impressions and hundreds of thousands of clicks to our site and Amazon next year. It is the most effective and efficient use of marketing dollars.”
-Patrick Bernard, Director of mEatCommerce
Perky Jerky also has an effective AMS strategy that allows them to display for lucrative search queries as well as showcase their brand offering through the Perky Jerky Amazon Store.
“Amazon allows us to meet customers when they are in mind to buy,” says Bernard.
“Our AMS spend allows us to match the most relevant products to the most relevant searches. We can interrupt someone in their purchase process and perhaps get them to try us, instead of someone else.”
For the full interview with Patrick Bernard, read Perky Jerky: A Digitally Smart CPG Brand Beefing Up The Competition.
Want to learn more about Amazon’s grocery operation and CPG opportunities?
Should Retailers Sell on Amazon Fresh or Prime Pantry?
Is Amazon Fresh Leading the Ecommerce Grocery Movement?
A Complete Guide to Amazon Prime Pantry
7 CPG Industry Trends and Opportunities For Digital Retailers in 2019
4 Incredibly Successful Direct to Consumer CPG Brands
Why Walmart’s Ecommerce Strategy Makes Them A Contender Against Amazon
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