Amazon’s growth and emergence as a retail powerhouse are undeniable. They are one of the top 10 retailers in the world with annual revenue of over $100 billion. A significant force in the retail space, Amazon is setting its sights on selling a lot more CPG products in 2017.
While online grocery sales make up just 2% of U.S. grocery sales, Amazon sees the grocery category as one that can fuel its continued growth. Since 2014, Amazon has offered Prime customers Amazon Prime Pantry.
Amazon Prime Pantry packages every day (non-bulk) non-perishable grocery store items into a single box for delivery for a flat fee. Prime customers can order up to 45 pounds or up to 4 cubic feet of dry goods and non-perishable groceries for a flat delivery fee of $5.99. The service is picking up steam and Amazon plans to increase its promotion of the service to its over 60 million Prime customers in 2017.
This move should be good news for CPG brands. Amazon could just be the company to help build e-commerce momentum for the CPG category.
Brands need to be prepared to take advantage of these potential online sales. Amazon has become a product search engine that can provide make-or-break purchase decisions for shoppers. Via Amazon’s self-service Seller Central product listing, CPG brands should closely manage to ensure that they are well positioned on their Amazon product page including reviews, photos, videos etc.
CPG brands can also take advantage of Amazon’s advertising and media tools with Amazon Advertising. This is another good way to leverage Amazon’s treasure trove of shopper data to target consumers while they are already in buying mode. Amazon is a fast-growing and powerful media platform that can provide strong results for CPG brands.
Amazon’s push to drive online sales for the CPG category could be a good thing for CPG brands if they are well positioned on Amazon and proactive with their advertising and marketing efforts on the site.
Not unlike other retail giants like Target and Walmart, Amazon has pushed into the CPG private label arena with Amazon Basics and Amazon Elements. The brand has already seen strong growth with their private label battery and baby wipes and has plans to increase its private label efforts in 2017.
Clearly, this will have an impact on CPG brands not just online but importantly in — store as well. 2017 will see Amazon move into the brick-and-mortar space with Amazon Go.
Amazon Go is launching in Washington state and will be the first of a physical Amazon experience where shoppers can buy fresh food and well, anything one might buy at Kroger, Stop & Shop or Shoprite.
While this provides CPG brands with a new channel, it also provides them with a new worry. With this expansion, Amazon further builds its empire and provides yet another sales channel for its private label brands.
Time will tell how Amazon Go performs and grows but this and Amazon’s push for online sales of CPG products is important. Is Amazon out to partner or compete with CPG brands? It’s a bit of both and smart CPG brands should factor these moves into CPG strategies for 2017.