I missed putting a recap together last Monday as I was in the air somewhere between Australia and New York on a 46 hour journey with a 4-month old baby. It went better than expected, but there are certainly better ways to spend a Monday and Tuesday… Like recapping all the exciting news for brands who sell on the Amazon marketplace!
Of course, the most notable news is Amazon’s monster acquisition of Whole Foods. There has been a lot of commentary on this topic already, so I’ll just summarize some key takeaways.
A physical store footprint will facilitate a new way to get products into the hands of Amazon customers. While online grocery delivery is popular in major metro areas (I myself am a huge fan of Fresh Direct & Amazon Fresh!), the economics don’t work in many areas of the US. Buy online, pick up in-store or click-and-collect is therefore seen as the most likely winning model for the majority of markets in the United States. Until now, Amazon has not had the physical footprint to compete on this level. Now, they have 460 stores.
This will help to grow Amazon’s credibility and sales in the grocery and personal care categories, so brands in the food and personal care space may stand to gain from more exposure both to customers online and those shopping physical aisles.
Whole Foods has acted as an incubator in the past, giving emerging food brands an opportunity to be trialled in a single store. Whole Foods even used to offer capital financing to some startup brands to help them scale up and increase production. Amazon also offers emerging brands more screen-time through such programs as Launchpad and Amazon Exclusives. So, if you’re a startup gourmet food brand, perhaps you’ll benefit from both programs.
Amazon also acquires a very popular private label, the Whole Foods 365 brand, which has a wide assortment and established supply chain. Amazon already has several private label grocery/CPG brands, and this will bolster their selection dramatically. This will put pressure on food brands to differentiate their offerings from whatever products Amazon is selling itself.
Good analysis can be found here:
WALMART’S FASHION ACQUISITION
Wal-Mart, naturally, had an announcement to counter Amazon’s big acquisition news, buying men's clothing retailer Bonobos for $310 million in cash. This is the most recent of several acquisitions of fashion brands by Walmart, including Mod Cloth and Moosejaw. These brands are more premium, Millennial-focused offerings that Wal-Mart has added to its holdings, seemingly in an effort to better compete with Amazon, which is also investing heavily in the fashion category.
AMAZON TARGETS LOWER INCOME DEMOGRAPHIC
Amazon already has excellent penetration in the mid- and upper-income households, and is now pursuing Prime membership at the lower income household level. Earlier this month, Amazon partnered with the USDA to allow food stamp recipients to use their EBT cards to buy groceries online starting in 2018. These customers are eligible for a one-year membership to Prime billed at $5.99 a month.
1 IN 27 RETAIL EMPLOYEES APPREHENDED FOR THEFT IN 2016
This news item stood out to me following a conversation at a conference last week with a brand that does large volumes on Amazon. This brand in the fashion/jewelry category cited issues where their customers were receiving empty boxes from orders fulfilled by Amazon’s FBA service. While Amazon probably has better controls and security in place than most retail or warehouse environments (pickers & packers have to empty their pockets and go through security screening after their shifts), brands should still be tracking shrinkage if selling on Amazon.