Amazons private label grocery opportunity biggest in shelf stable category
New shopper insight research finds that 35.8% of shoppers would consider buying Amazon private label grocery products, if they were offered on the site.
The study, carried out by ResearchFarm showed that purchasing intent is strongest among the shelf stable categories such as tea and coffee, cereals, dry pasta and sugar. With a consideration index of 2.28 out of 5.0 the shelf stable category is closely followed by health & beauty and toiletries categories (2.26) and disposable paper and household cleaning products, mirroring category development of the online powerhouse’s grocery offer in the US, Germany and the UK.
Grocery remains a fairly niche segment for Amazon, with only 11% of panel respondents having shopped within the consumables category over the last year. This percentage rises to more than double though for prime members. 25% of those with a prime membership have shopped in the grocery category already.
The research finds that shoppers who have previously bought in the consumables category are 27% more likely than the general population to give a potential Amazon branded product a try, demonstrating high satisfaction levels with Amazon’s existing service and a great opportunity for the company to build on the good will generated so far.
Crucially, this halo effect does not transfer across to fresh foods. 47.3% of shoppers surveyed stated that they were “very unlikely” and a further 28.0% “unlikely” to try Amazon private label fresh food, including dairy and meat products. Perhaps unsurprisingly the fresh category performed the worst in the survey, as shoppers at the moment simply do not believe it’s in Amazon’s core competency. Moreover, a full scale fresh offer would presuppose a proprietary logistics set up that enables cost effective refrigerated transport, which in Europe at least seems some way off still.
The research shows that there is a clear window of opportunity for FMCG companies to join the ecosystem and sell brands online, without having to fear competition from Amazon itself.
However this window could be closing fast. As the willingness to try potential Amazon branded grocery lines jumps by almost 20% for Amazon shoppers with a prime membership and by 27% for the existing Amazon consumables shopper, Amazon could mirror its non food strategy in online grocery, exploit its existing customer relationships and start competing with its third party sellers and partners on the most successful grocery lines in future.
Daniel Lucht, Research Director at ResearchFarm comments,“Following its strategy to offer the widest possible selection over time, with which offline grocery retailers simply cannot compete, Amazon is progressively widening out grocery ranges. Private label versions of the most successful and best selling items could be a nice fit for the pureplay. An Amazon private label product could also provide a significant growth boost for FMCG companies, as someone has to produce the products for Amazon.”
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