Amazon Fresh Makes Its Move

Amazon Expands Grocery Delivery Service

Amazon, the internet retail giant whose every move ripples through eCommerce, announced yesterday that it was waiving its $14.99 membership fee for its grocery delivery service, Amazon Fresh for Prime members. Undoubtedly, this move will have major effects for both consumers, grocery retailers, and CPG brands. However, it may take a while for those effects to be visible, as Amazon is taking a tiered approach to expanding the delivery service.

 

Initially, only current Amazon Fresh subscribers and Amazon Prime members who have previously used the Prime Now delivery service for Whole Foods purchases will be able to take advantage of the service. Amazon Prime members who have not used Fresh or Prime Now will have to apply to use the service while Amazon works on expanding its availability across markets.  This will position Amazon to be a leader in grocery retail - with over half of U.S. households being Amazon Prime members, Amazon has removed the mental and financial barrier attached to using Amazon Fresh by offering it free to Prime members, greatly expanding its reach. In addition, it has provided a value add to the Prime membership which may drive up membership. As key Prime membership benefits are mimicked across retailers, from free shipping to same-day delivery, Fresh membership will provide a boost to Amazon.

 

How can CPG brands and fresh product manufacturers prepare for growth in eCommerce?

Food brands can look to outside categories on how to maneuver eCommerce. It will be critical for brands to create high-quality product content for both brand pages and product detail pages. Appeal to consumers through enhanced  A+ content, professional photographed product images and video, and enhanced brand product (EBC).

 

As consumers acclimate to purchasing CPG and fresh products through eCommerce channels, they will apply their online shopping behaviors. Data shows that the minimum number of reviews a product needs to have in order for a customer to engage in 15 reviews. This means brands will need to have a rating and review strategy to gain new customer reviews, respond to negative reviews and utilize consumer insights from review data.

 

Unlike non-CPG categories, brands (especially those producing "fresh" items) will need to be more aware of regional inventory and pricing to ensure availability for consumers. While many consumers have a preferred brand for kitchen staples, they do not hesitate to move to a second choice if the item is unavailable or if there is a less expensive but comparable item.