How to Grow Your Grocery Brand on Amazon
by Irina Balyurko, on October 27, 2016
Consider these statistics: grocery and clothing are two of the largest retail categories in the U.S. In 2015, 52% of U.S. consumers purchased clothing online, yet only 16% of U.S. consumers bought packaged groceries online. Online shopping habits for consumables, food staples and food gifts have vast opportunities ahead. More and more consumers turn online to not only find specialty food items that they cannot find in stores, but also to make consistent recurring purchases of items like non-perishable food staples. Online marketplaces are disrupting the $600 billion-a-year grocery industry. How can your food or beverage brand take advantage of this growth on the Amazon marketplace?
In this post, we look at a few key criteria relevant for a food and beverage brand.
One of the foundational aspects of success for any business is to determine the value proposition based on the benefit and experience that brand brings. How is your brand unique and exceptional? How do your customers benefit from product features? For example, if your products are made of quality ingredients, why should customers care? Even if it seems obvious, making a clear connection between features (such as ingredients, taste, flavor) to how your product will bring an enjoyable experience, solve a problem or contribute to customers' lifestyles will make it easier for consumers to make a buying decision.
Trends heavily influence shopping behaviors in the food category. Increasing awareness and preference of healthy, naturally sourced, minimally processed foods, growing concern about food production footprint on our planet, fad diets, faster discovery and adoption of alternatives to traditional ingredients are some of the trends to consider when creating your branding message. And while building your core value proposition on trends is not the best long-term sustainable strategy, you can leverage trends to acquire more customers, raise your brand awareness and increase repeat purchases.
Well-Optimized Product Listing
It's difficult to overestimate the importance of a well-written product listing in the Amazon marketplace. Thoughtfully written and optimized for both customers' eyes and search engines, your product listing is an important foundation to build before running ads or soliciting reviews.
Here are some actionable tips:
- Structure your listing to accommodate potential future variations. Often new flavors or sizes are added to the same product line. So if you plan to bring more variations in the future, consider setting up a parent/child listing from the start. For example, if you now have your product only in strawberry flavor, but plan to introduce a peach flavor in a few months, create a parent listing with one variation of strawberry flavor. This will allow you to add peach flavor to the Amazon catalog correctly in the future and will help leverage any existing reviews for your new flavor since reviews on parent/child listings aggregate. In other words, your new peach flavor will show all the reviews that your strawberry flavor will have received by that point on its child listing.
- Review your product description from the perspective of translating concepts, such as flavor and texture, into experience and results. How do customers feel during and after consuming your product? What type of experience do they receive? Will smell or flavor evoke any positive memories or emotions? Using sensory words can be very powerful, so describing your product from the standpoint of experience will give customers room for imagination. If you struggle with giving a vivid product description, you can use words from customers' reviews to describe their experience with your product.
Food and beverages have a high potential of repeat customers. We all personally know that once we find a consumable type of product we like, we are more likely to buy it over and over. Here are a few ways to increase the lifetime value of a customer through repeat purchases:
- Enhance your customer's experience by giving a freebie. Whether it's recipes or a guide about the health benefits of your products, giving customers free valuable information helps establish a relationship, which is key for any repeat business. Amazon customers usually do not expect to receive additional information after their order, so such an unexpected small gift will make your brand stand out. It will play to the law of reciprocity: psychologically we always want to return a favor after we receive something for free.
- The Subscribe and Save (S&S) subscription program allows customers to set products on automatic delivery in exchange for a discount. There is no cost for a customer to set up S&S. It allows customers to put purchases of products they use repeatedly on autopilot.
There are certain eligibility criteria, on both seller and product level, that have to be met for third-party sellers to qualify to offer S&S service. First check to see if S&S is enabled: In your Amazon Seller Central account go to Settings - Fulfillment Settings – Subscribe and Save – Enable, and then click update. If you are eligible, the S&S option will automatically show.
Managing product reviews is always critical for success on the Amazon platform, since the Amazon search algorithm considers reviews very high in relevancy. However, in the Grocery category, it adds an additional challenge because customer experiences are based on very subjective concepts, such as flavor, taste, texture and smell. How can you ensure customers have positive experiences that meet expectations?
Provide a descriptive and detailed product listing. In the earlier point we talked about importance of a well-optimized listing for your food or beverage brand. Describe your product so customer expectations are aligned with what you deliver. For example, if your product has a very crunchy texture, noting that is important because a lot of customers have strong preferences when it comes to texture.
Inventory management is an important category for any product-based business. Expiration dates and the fragility of packaging for liquid products add complexity to inventory management for food and beverage products. Receiving broken or stale products creates a bad customer experience and can lead to a negative product review or seller feedback.
There are a number of requirements that have to be met for a product to be shipped using the FBA service. For example, liquid and fragile (such as glass) products have to pass a 3-foot drop test. The expiration date must be at least 105 days out when items are received in an Amazon warehouse. Temperature-sensitive products, such as chocolate, are only accepted for Fulfillment by Amazon inclusion between October 1st and April 30th.
While these requirements could seem burdensome to a business, using the FBA service has its own advantages. The program allows third-party sellers to reach Amazon Prime customers, who often prioritize convenience and a guaranteed two-day delivery over price. It also allows a business to streamline operations, since Amazon.com, Inc. ("Amazon") takes on the customer service and fulfillment aspects of the business. Additionally, when a customer leaves a negative feedback due to receiving a broken item, damaged packaging, or a product past expiration date, Amazon will take responsibility in most cases and remove the feedback, since it falls under fulfillment experience.
Strong Potential for Grocery Sales
The food and beverages category is still in the early-adoption phase in the overall eCommerce world, and even on a hyper-competitive Amazon marketplace, it presents untapped opportunities for third-party sellers. More and more shoppers buy online not only for niche specialty food items, but also non-perishable products. It is also possible that Amazon will open up new arenas such as the Amazon Fresh program and the Amazon Prime Now market for third-party sellers in the future. All of that gives food and beverage brands exciting possibilities to diversify and grow their business on the Amazon platform.