Dive Brief:
- Amazon has launched Storefronts, a new platform for the e-commerce seller that caters exclusively to products made by small and medium-sized U.S. businesses. The curated collections — 25 in all — of more than 1 million products includes categories from kitchen items to groceries and pet supplies.
- The site also displays product videos and stories in an effort to better connect with the consumer. Each week Amazon will rotate feature profiles of U.S. small and medium-sized businesses selling on the e-commerce site. The company has launched a national TV advertising campaign to promote the new venture.
- According to CNBC, third-party merchants are responsible for more than half of all products sold on Amazon sites worldwide. With the introduction of Storefronts, that number could tip even further, bringing more small and medium-sized businesses to the masses and drawing in new Amazon customers.
Dive Insight:
According to Amazon, more than half of all products sold on its e-commerce platform already originate from small or medium-sized businesses. The e-tailer has spent the last few years grooming this side of its market. In 2017 alone, 300,000 small and medium-sized businesses in the U.S. started selling on Amazon, and more than 140,000 of these businesses surpassed $100,000 in annual sales.
Specifically within the realm of grocery, Amazon has tried to be more accommodating with merchants in an effort to fully load up its site with non-perishables and home goods. Just last month the company announced an extension on its promotion to sellers, which reduces the referral fee on grocery products under $15 — an 8% fee versus 15%. Originally the promotion was set to end in October but has now been extended until December 2019.
This promotion leaves the door wide-open for more vendors to sell everyday grocery products on the giant’s site, while also encouraging consumers to purchase these food and grocery items online.
Amazon has certainly been active in the grocery space lately, from its acquisition of brick-and-mortar Whole Foods to the consolidation of its Fresh and Prime Now services and this year’s launch of convenience-like store Amazon Go, which just opened its fourth location in Chicago.
Amazon controls an 18% market share in U.S. online grocery sales, double that of Walmart, according to One Click Retail. And the company will continue to disrupt the grocery market and grab more share as consumers get more comfortable shopping for food online. Packaged Facts forecasts that Amazon’s grocery will grow substantially during the coming years, reaching $30 billion by 2024.
Amazon's many grocery options are an attempt by the company to meet a variety of customers where and how they want to shop. Some observers, however, claim the diffuse offerings are confusing to shoppers.
With StoreFronts, Amazon seems to be tapping into something it has yet to conquer in the food and beverage space — the mom and pop shop. Everyone knows that the company is super giant, but in a time where community, loyalty and values are becoming increasingly a part of a consumer’s choice of where to shop, showing the attachment to local, small, community-oriented businesses might further boast Amazon’s image.