Ask @RetailPhil: How Will AmazonFresh Affect Craft Food & Beverage Brands?
It seems like eons ago since Amazon was a well known online book retailer, and Kindle purveyor. Since then, Amazon has become quite a significant part of many consumers’ lives. With $107 billion net sales in 2015, and 304 million active accounts worldwide, Amazon has quickly become an integral part of e-commerce.
Amazon does it all
While many see Amazon as a single entity, the reality is, the e-tailer is many things built into one. As a brand, Amazon could be a wholesaler, who buys your product and re-sells it; a marketplace, where you can set up your product, and have consumers buy it via the Amazon portal; or a drop-shipper, where Amazon makes the sale for you, but gets you to ship the product directly to the customer. As a consumer, Amazon is a product review site, a search engine, and an online store where you can both make a purchase and compare pricing.
In fact, Amazon is a bigger part of all our lives than we all think. In the process of growing and expanding, Amazon realized that they were very good at systems as well, and launched Amazon Web Services (AWS), providing cloud and database services that are utilized by many businesses. Today, this service is in 14 geographic regions, generating over $5 billion in sales last year, and recently landing a $600 million account with the CIA.
In 2015, Amazon launched Flex, a program that mirrors the Uber program, to get drivers to deliver Amazon packages. According to Amazon, Flex is already delivering in 30 cities in the U.S. with 11 more on the way. This helps Amazon cut down on its logistics cost while continuing to deliver Amazon Prime’s promise of same-day delivery.
What will AmazonFresh mean for my business?
So, why the lesson in Amazon? In 2013, Amazon started a venture called AmazonFresh that delivered groceries to a consumer’s front door within 24 hours. So far, expansion has been a slow process – while they were off to a quick start, delivering groceries to parts of the American West coast, Amazon eventually stopped expanding to re-invest in its infrastructure. Now, AmazonFresh is back. There are over 95,000 different items available, which can all be delivered same-day (if the orders are placed by 10 AM), or next-day. Today, AmazonFresh can be found in Seattle, Los Angeles, San Francisco, San Diego, New York City, Philadelphia, Baltimore, Sacramento, Boston, and Dallas with more locations to come.
AmazonFresh represents a chance for craft brands to compete with bigger businesses in a meaningful way. While participating in Amazon programs may have some hazards, for the most part, it allows small brands to be able to deliver their products in the same manner as large brands, bypassing conventional retailers in order to get straight to what’s most important: the consumer.
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