Food is a Big Opportunity at Amazon with Amazon Fresh
While it’s no secret that Amazon dominates the US eCommerce market with 40% market share (eMarketer), there is conflicting data as to who is truly winning the battle for online grocery. With perishable and low-priced grocery items presenting major logistical challenges, Amazon’s traditional eCommerce model has been ill-equipped to supply the growing demand for grocery delivery, which was a shorter leap for the likes of Walmart and Target.
However, Amazon has been testing and learning through the years with different initiatives including Amazon Go, Pantry, and Prime Now, with all of those learnings now being funneled into the Amazon Fresh Program. In an arena crowded with powerhouse competitors like Walmart and Instacart, as well as localized instant grocers like GoPuff, Amazon won’t be caught napping. They are dialing in their focus on winning the grocery game by expanding Amazon Fresh stores (full-size grocery) with quick delivery services and adding 18 new Amazon Go stores (convenience) in and around Southern California, Washington, Seattle, Chicago, with seven more locations in progress (Bloomberg).
First, let’s break down the differences of Amazon’s grocery verticals:
- Amazon Go: contactless, “Just Walk Out” technology, cashier-less system in Amazon grocery stores
- Whole Foods: premium, higher price point, organic. Important note for Suppliers: Whole Foods has separate buyers and management from the rest of Amazon despite it being marketed as part of the Amazon eco-system.
- Amazon Fresh (current): combining Amazon Go cashier tech with an affordable, convenient grocery store. Characterized by lower prices than Whole Foods, quick delivery.
Opportunities for Brands with Amazon Fresh
As Amazon Fresh has been restructured and reorganized, there are a few areas where Suppliers should feel informed of the opportunities that could improve their business:
- Promotion planning: Brands will need to consider what promotional vehicles/investments are right for them as they develop a trade strategy accounting for both physical and digital aspects of the business.
- Supply Chain: Amazon Fresh business adds complexity to the Amazon supply chain, as it requires navigating both distribution centers for online and physical stores. Fresh stores will be supplied by the same distribution centers as online, but creating effective hybrid strategies involving distributors and direct shipments could create savings for brands
- Omnichannel strategy: Amazon Fresh stores carry a subset of the selection available on the Amazon Fresh website, so by creating successful brands on the online experience, brands create opportunities to secure physical store placements.
How can Harvest Group help brands navigate the new Fresh?
Harvest Group is proud to provide a holistic approach at Amazon, serving clients across content, catalogue, business strategy, and ad spend. With the industry currently split into separate agencies for each function of the business, Harvest Group is poised to provide unique value by serving across all functions and using the insights gained from each to inform total retail strategy. Harvest Group’s advanced data reporting and analytics is also a strong resource for brands wanting to compete. Amazon Fresh is reported separately from Amazon Retail, and is notoriously difficult to track at a granular level. Harvest Group has invested to help brands have the visibility they need to the part of the business and to draw out meaningful insight.
Additionally, having an Amazon team that is informed of the total retail picture is more important than ever. Harvest Group’s Amazon team works alongside their Walmart, Sam’s Club, Target, and Kroger teams, allowing them to approach their Amazon strategy with a total retail perspective.
Amazon Fresh is a fast-growing opportunity and first movers who build winning strategies are going to earn the majority of brand share. Harvest Group brings a deep knowledge base of traditional retail, adapting that knowledge to help our clients win on Amazon Fresh in a few ways:
- Supply chains have been changing constantly with Fresh, moving from delivery directly to DCs to leveraging Spartan Nash and similar distributors to now building their own consolidation points to further optimize efficiencies. Given the speed required to effectively service and adapt to Amazon Fresh’s constantly changing supply chain needs, brands need an agency partner who can make effective recommendations for fulfillment options and help them find the best fit amongst a plethora of options.
- Agencies that know how to effectively service clients on Amazon.com are not necessarily as equipped to service clients on Amazon Fresh, as the Fresh side operates with a more traditional buyer relationship since Vendor Managers (VM) have a more in-depth understanding of categories and strategies to grow/win in their Grocery category. By contrast, a dotcom VM is more focused on operations and high level points of selection, price, and profitability, with more limited category knowledge outside of what is shared with them via Suppliers.
- Harvest Group can also provide deep insights and knowledge of Amazon Fresh reporting. Harvest Group’s data systems are scalable and efficient, allowing our industry experts to quickly identify opportunities to develop and grow the business.
- Investing “smartly” in Amazon Fresh programs/opportunities designed to drive volume is key to driving a high ROI for Harvest clients. Harvest Group helps clients navigate the complexities of investing trade funds across a channel whose physical stores and online experience are deeply connected.
Succeeding in Fresh requires a different approach than does traditional Amazon.com. To stay current with Amazon Fresh as it continues to build its omnichannel grocery offerings, it is extremely beneficial to partner with a retail agency that is going to work side by side with your brand to deliver exceptional service at the rapid pace Fresh is demanding as it continues to grow.
If you want to learn more about Harvest Group’s Amazon offerings, reach out firstname.lastname@example.org or fill out our Contact Us form