- Original entry: 7/1/2017
- Updated: 8/16/2017
There’s much discussion about this acquisition and its impact on AMZN, WFM, consumers and competitors.
I have seen no discussion about the impact on brands and manufacturers in CPG, or as of this writing, not yet.
My take is this is another indication of a long-term trend in retail where online only sellers are moving into retail, not just using the infrastructure they built to sell product at brick/mortar, but more importantly, using the data to drive how they design, stock and sell in brock/mortar.
The data is where it is all at and what brands and manufacturers need to be focused on.
Amazon is a data powerhouse, and they know precisely which products sell, to whom (the demographics and psychigrampsic and to a certain extent, the behavior that drives the sales of products to certain people), and where (geography).
They can use this data to inform what goes into retail, in which specific locations and how to categorize them for better cross/up/down-sells.
For example, I sell pet food treats and pet food. In retail, those are separated by sub-sections in general CPG, like grocery, and in separate aisles in pet food stores. What could dramatically influence more sales to my brand and to the retailer is to group the treats and dog food together, not separate. This is easy to do in context of e-commerce (I do it through cart up/cross/down-sells), but is not done at retail.
Amazon could make this happen.
How should brands and manufacturers position for this?
Sell online, direct-to-consumer (your website, or through 3rd-party marketplaces like Amazon, as long as you can collect the end-customer data for your own database), gathering data on product sales and who is buying those products, so that you can walk into Amazon/WFM to help inform the category buyer where you should sell, in what location, with how much inventory per store, and how it should be grouped on shelf.
As established/legacy brick/mortar begin to adapt to e-commerce and direct-to-consumer delivery through either their own logistics or through partnerships/acquisitions (8/16/17 update: Aldi/Instacrt and Target/Grand Junction), they will start to gather this data on exactly what we all buy, from where, when, in what quantities, with which other products we had in the cart, etc.
Knowing this data ahead of time for your own brand selling direct-to-consumer (your website, or through 3rd-party marketplaces like Amazon, as long as you can collect the end-customer data for your own database), will only help you in placement in brick/mortar. At some point, if may hurt those brands that do not have this data.
8/16/17 Update: See this Micro Content post about Wal Mart using its consumer data to improve sales.
8/24/2017 Update: See this Micro Content post about Rite Aid and RangeMe as a way to streamline the vendor discovery and sourcing process to speed up the ability for all parties to sell product from vendor to consumer. If vendors have more data about what sells and what does not, when, to whom, where, and discovery/sourcing platforms like RangeMe can coral that data for retailers to see, then that can assist retailers in selecting product to sell. This makes it much easier to find products from vendors that fit specific needs for a retailer, even down to stocking in specific stores where products might sell, but not in other stores where there is a different target consumer and they might not sell.