Amazon CPG Digest - 09.14.2024
Irina Balyurko
Amazon Marketplace Advisory | Ecommerce Development | Fractional Ecom Support
Packing hefty topics in today’s edition.
Happy almost end of September, and beginning of Q4.
Amazon vendors receive termination of relationship notice
This week rocked Amazon 1P/Vendor Central vendors, with many receiving the following communication from Amazon:
The timing, the language of the communication sent, and the irrevocable nature of their decision? don’t leave room for any illusions about relationship equity from one side of this Marketplace-Vendor relationship.?
If you received this email, OR if you are thinking of moving away from 1P vendor side, here is my analysis, and an offer to help.
E-commerce Giants and Pricing Pressures: The Chinese Challenge to the U.S. Brands
Confluence of news on the subject of cheap imported competition, marketplaces that offer that, and US manufacturing competitiveness.
The Biden-Harris Administration has introduced new actions aimed at tightening regulations around de minimis shipments, particularly targeting unsafe and unfairly traded products entering the U.S., many of which originate from Chinese e-commerce platforms.? (bolding is mine)
Currently the de minimis rule allows goods valued at $800 or less to enter the U.S. duty-free, tax free, and with less information than other imports.
It’s not clear exactly how this will be enforced, the idea is to no longer allow smaller overseas shipments get to the US duty free, and with less scrutiny.
The timing of this announcement (right before the presidential elections) certainly is a pure coincidence.?
While this does not impact CPG as significantly as other categories - 70% of the de minimis shipments are textile and apparel imports from China - it’s important to watch the ecommerce, supply, and consumer domino effect??
Does this hurt Temu? Somewhat, but it will not stop its momentum.?
Will Chinese manufacturers pass costs to the US consumer? Will it help US manufacturers’ pricing competitiveness?
Time will tell.?
While many US consumers, and ecommerce professionals (speaking from experience) scoffed at Temu's cheap assortment and gaudy website/app interface, Temu has become the 2nd valuable marketplace in the world.
It took Amazon 24 years to reach 700 million monthly visits.?
It took Temu 2 YEARS to get the same.?
Granted, we can’t compare 1990s early days of ecommerce to the current tidal wave. In many ways Temu is standing on the shoulders of giants, biggest one being Amazon.
But the growth velocity of Temu has been astounding.
领英推荐
79 countries. 25% of that traffic from the US. Surpassed Ebay in 2 years.?
Still unprofitable, but so was Amazon for many years.?
?Brands whose main competitive advantage was cheap sourcing costs are no longer viable.?
Innovation, branding, personalization, and some regulatory propping are the advantages of US brands and manufacturers to double down on
We help brands with strategy, channel management, revenue and profitability optimization, and operational buildout of the Amazon channel. Schedule an intro conversation here, or simply reply to this email with your Amazon challenges
Amazon launches ‘Saver’: its new private label grocery Brand
Amazon has launched "Saver," a private-label grocery and household essentials brand offering low-cost essentials to budget-conscious consumers.?
This obviously aligns with? Amazon’s longer term grocery category focus.?
And clearly aims to compete with Walmart and Target.
But I have so many questions about this.?
Packaging looks to be designed by a fresh out of college employee, who interned at Target ‘s Market Pantry division.
Why is Amazon not expanding its’ Happy Belly private label line, that has been growing, receiving strong customers reviews, and that is already in Amazon Fresh stores??
My current interpretation is that Amazon Saver is a 100% competitive play against Walmart and Target - narrow catalog, clear targeting of low-priced products to budget-conscious consumers.?
Impact to CPG brands
Tangible pricing pressure on mid-tier CPG brands, who do have price-conscious customers as its market segment, which overlaps Amazon Saver customer.?
Marketing pressure - Amazon Prime members will get an additional 10% off on Amazon Saver products.?It’s doubtful many CPG brands are willing and able to match that as an ongoing promotion
And again: Branding, packaging, innovation, personalization are levers that Amazon PL products do not offer, but you do. Amazon is a utility product maker. Competing mostly on price is not sustainable for most CPG brands, on Amazon own platform.?
So you may agree that the more compelling value proposition has to come from the not-matching-Amazon-price areas.?
Amazon saver will be rolling out through the end of the 2024, at which point we will assess its impact on the Grocery category dynamics, and share with you.
Saludos,
Irina
Helping CPG brands navigate Amazon marketplace smartly and profitably. DM to explore how I can help