CPG eCommerce
Intelligence: 7 Insights into Amazon's Prime Pantry
To
coincide with the launch of our Amazon FastMovers reports,
Profitero looks at Amazon Prime Pantry’s pricing, assortment, and best-selling
products to see the depth of CPG eCommerce intelligence we can glean from
Amazon’s growing portfolio of CPG eCommerce “formats.”
With
the introduction of Prime Pantry in April 2014, Amazon took another key step
forward in its always-evolving approach to building an economically sustainable
model for CPG and grocery eCommerce.
Offered
exclusively to members of Amazon Prime, Prime Pantry offers “low-priced
everyday essentials in everyday sizes.” For a delivery fee of $5.99, Prime
members can fill a box with up to 45 pounds or 4 cubic feet of products,
choosing from a selection of more than 2,000 items.
Coinciding
with the launch of our new Amazon FastMovers reports,
Profitero took a look at Prime Pantry’s pricing, assortment, and best-selling
products to see what we could learn about this pillar of Amazon’s growing
portfolio of CPG eCommerce “formats.”
1. 18 of Amazon’s 100 best-selling Grocery & Gourmet Food
products in November 2014 were eligible for Prime Pantry
It’s
difficult to designate Prime Pantry a success (or failure) at this early stage.
But
representing nearly 20% of the items on Profitero’s FastMovers report for
Grocery & Gourmet Food products in November 2014, Prime Pantry certainly
seems to be getting traction—at least within the context of the overall
Amazon.com grocery business.
Among
the best-selling products in November were staples including Kraft Macaroni & Cheese ($4.50,
2.6 lbs), Progresso
Chicken & Homestyle Noodles ($1.25, 1.4 lbs) andNestle Pure Life purified water ($3.50,
28 lbs).
The
program is designed for exactly these kinds of high-household-penetration
products whose price points or price-to-weight ratios make Amazon’s traditional
shipping model economically unviable.
2. Non-food products (household supplies, personal care, etc.)
accounted for 38% of the Prime Pantry FastMovers list in November 2014,
under-indexing their 46% share of all products in Prime Pantry
In
addition to food products, Prime households seem to be stocking their pantries
with everyday essentials like Tide laundry detergent and storage products from
Glad and Ziploc.
Though
non-food products’ share of the FastMovers list slightly under-indexes their
share of the total Prime Pantry assortment, there are several non-food brands
among the top 5 brands ranked by number of products represented in the
FastMovers list for November.
Brands Ranked by # of Products in Profitero’s Amazon FastMovers
report for Prime Pantry, November 2014
Source: Profitero
In
fact, General Mills’ Nature Valley (3 products) and Progresso (3 products) are
the only food products to place among the top 5 brands ranked by # of products
appearing in the Prime Pantry FastMovers list for November 2014.
3. Prime Pantry’s best sellers are among the most consistent
performers on Amazon
As
a measure of a category’s relative stability, Profitero’s FastMovers reports
monitor the number of “new arrivals” to a category’s list of best-selling
products for a given month versus the previous month.
For
November 2014, Prime Pantry ranked last among more than 35 top-level categories
studied in the US, with just 3 “new arrivals” compared to October 2014.
Select Top-Level Categories Ranked by # of “New Arrivals” in
Profitero’s Amazon FastMovers reports, November 2014
Source: Profitero
This
isn’t entirely surprising given Prime Pantry’s relatively limited assortment
(~3,500 products) and the absence of third party (3P) merchants.
But
it does underscore the opportunity for manufacturers that succeed in securing
distribution within the program, since it suggests that high-performing
products in the program may face less competition than on Amazon’s broader
platform.
4. More than three quarters (76) of the Prime Pantry products on
the FastMovers list are sold in single packs
One
of Amazon’s key promotional points for Prime Pantry is the availability of
“everyday essentials” in “everyday sizes.”
With
more than three quarters of the products in the FastMovers list configured in
individual packages, or “eaches,” it seems clear that Amazon is working with
manufacturers to offer products in smaller pack sizes, as opposed to the bulk
(or “club”) packs more common in membership clubs some early observers expected
to see.
5. 56% of the products offered on Prime Pantry are available from
Amazon Fresh, compared to just 7% available on Amazon.com
Along
with Prime Pantry, Amazon Fresh is another of Amazon’s key vehicles for selling
grocery and CPG products.
Unlike
Prime Pantry, Amazon Fresh is inherently local. The service, which offers a larger
assortment of both shelf-stable and perishable foods (including chilled and
frozen foods), is offered in Seattle, Northern California, Southern California,
and recently expanded to parts of New York City and Philadelphia.
Despite
many differences between them, Amazon Fresh and Prime Pantry share many of the
same products, with more than half (56%) of the products offered on Prime
Pantry also available on Amazon Fresh in the exact same configuration.
An
additional 9% of Prime Pantry products are offered in like-for-like, or “LFL”
configurations on Amazon Fresh—defined as the same product offered in a
different size or pack configuration.
Percentage of Prime Pantry Products Available on Amazon Fresh
and Amazon.com (1P Only) in Exact and Like-for-Like Configurations, October
2014
Source: Profitero
Note:
- *Food & Cooking is a
composite of the Food & Snacks and Cooking categories
- “Exact” refers to identical
products in the exact same configuration
- “LFL” refers to identical
products sold in like-for-like configurations (different sizes)
- Amazon.com matches refer only
to products sold directly by Amazon
In
contrast, just 7% of Prime Pantry products were available from Amazon.com in
exactly the same configuration. 16% were available in like-for-like
configurations.
Personal
care (76%), health & nutrition (60%), and pets (59%) were the categories
with the greatest overlap between Prime Pantry and Amazon Fresh, with Baby
(34%)
6. On exactly matched items, Prime Pantry and Amazon Fresh are
priced almost identically
After
seeing the relatively high degree of overlap between products offered on Prime
Pantry and Amazon Fresh, we were curious about the comparative pricing between
the “national” and “local” formats.
Amazon Fresh and Amazon.com (1P only) Price Index vs. Prime
Pantry on Exactly Matched Items, August 21, 2014 – November 21, 2014
Source: Profitero
For
exactly matched items, we calculated the price index relative to Prime Pantry
for both Amazon Fresh and Amazon.com and found that Amazon Fresh was marginally
cheaper compared to Prime Pantry.
On
the relatively limited selection of exactly matching items available on both
Prime Pantry and from Amazon as a seller on Amazon.com, however, Amazon.com
indexed 32% more expensive. It seems likely that Amazon is trying to encourage
customers to buy these products through Prime Pantry.
7. 95% of the Prime Pantry products on Profitero’s FastMovers
list were priced below $10 in November 2014
Offering
to help Prime households “save on the essentials,” Amazon references low prices
in a description of the program’s details. And indeed, the prices appear to be
low.
78%
of products on Profitero’s FastMovers list were priced below $5, and 95% were
priced below $10.
The
average price of Prime Pantry products on the FastMovers list for November was
just $3.91.
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