Amazon is constantly coming up with new innovations in its quest for world domination…er customer service perfection. These create mixed feelings in the FBA seller community because change is scary and because Amazon doesn’t always act in our best interests. In this concern we are not alone. I imagine all of Amazon’s partners have these moments. Two innovations that have recently been launched are the Amazon Pantry and Amazon Supply. Supply has actually been in beta for about two years. I’ll tell you later why you’ve not heard of it before.
The Pantry is more likely to impact our businesses. What Amazon is doing is allowing busy consumers to order what it calls “pantry” supplies for a good shipping price. It will provide all kinds of conveniences:
- Easy ordering of your favorite non-perishables – limited choices=faster shopping
- Ability to remember orders/brands for faster re-order
- Fast payment through 1-click, etc.
- Separate website from Amazon.com
- Fill a large box for $5.99 and get it delivered in 2 days
- Buy individual items rather than large multi-packs of your most frequently used goods
- The Pantry keeps track of your order and lets you know when your box is full so you can decide to fill another box or not
- Can buy Tide, cereal and other heavy or large-size items and get a flat shipping rate
- Good prices on pantry items – not jacked up
- You are buying directly from Amazon – no third-party sellers
I don’t know if they are sending out reminders to keep the pantry stocked, but I bet they will. Having represented a grocery chain in the past, I can tell you the Pantry is worrisome. They are not only fighting off Wal-Mart, now they have to seriously compete with Amazon.com. To some degree the “3-mile” rule will still hold true and the convenience of dropping in day or night for some ingredient or wine will keep people in the stores, BUT consumers don’t like to go grocery shopping.
Many of the more profitable shoppers will now drift over to Amazon for the very goods that make up the foundation of a grocer’s bottom line. It’s the Tide®, not the eggs that make them money. This is both good and bad for us as sellers. More people will be buying online which is good, but our sources for inventory will be closing over time which is bad. Rather than fiddle while Rome burns, let’s make some money!
What does this mean to us?
- We will probably like the Pantry as consumers
- The Pantry is currently limited – basic supplies like salt, pepper, soap and Tide – not the fancy stuff like chickpea spice
- If Amazon is out of something, Pantry customers will have to go to Amazon.com to get it
- Most of the items Amazon is selling in the Pantry never were good opportunities for us since Amazon sold them already at a price we couldn’t beat
- If people don’t have a full box of goods they want to buy, they may choose to buy off of Amazon.com instead
- People may not want to pay an extra $5.99 shipping (remember, Prime members are spoiled!)
- For the short-term, our bundles and multi-packs should still sell as the Pantry is so new most consumers don’t know about it
- Amazon Pantry is a separate website which some consumers won’t like
- If someone wants to buy a mix of pantry and other goods or only a few pantry goods, they may decide to buy off of Amazon.com and get free shipping
- We are now excluded from selling single items that are in the Pantry. Period. No solos on Amazon.com either.
- Pantry customers will not see their other choices. If they want six “Singles to Go” drink mixes, they will likely buy six individual boxes from the Pantry rather than a multi-pack from one of us
- The Pantry will expand over time
- Once Amazon adds an item to the pantry, it will probably no longer be a good seller or as good a seller on Amazon.com in any form/bundle/multi-pack
- Pantry goods show up on Amazon.com which will help consumers find the Pantry
For those of us who are currently selling items that Amazon has added to the Pantry, we will probably not be replenishing those goods once they sell out. I’m going to wait and see on that. I do have several multi-packs up there that Amazon added to the Pantry as solos. We’ll see.
From a competitive perspective, my approach is going to change a bit as I focus on items that are not in the Pantry. When I was scanning earlier this week, I would look at multiple offers for my desired products and I saw several where the department said “Pantry” instead of “Grocery.” So the good news there is we can find out if something is a Pantry item before we buy it.
- If you pick up something and see on your scanner that it is sold as a solo item, check the offer to see if it is a Pantry item
- Look for unusual items that are not in most people’s pantries and/or are harder to find – exotic spices, mixes, smelly tinned fish, ethnic ingredients…that kind of thing
- Look for regional goods that are unlikely to be added to the Pantry
- Consider more bundles rather than multi-packs
- Just like discontinued toys, discontinued foods still offer us an opportunity (check those expiration dates closely!)
- There are brands that Amazon does not sell (the manufacturers don’t want to work with Amazon) which are opportunities for FBA sellers
Lastly, don’t panic! With the changes in category restrictions last week, there was a lot of panic and speculation that turned out to be nothing for most of us – a real tempest in a teapot. The Amazon Pantry does mean change for us, but we still have opportunities. Competition is a fact of life in sales and we compete every day against Amazon, other FBA sellers, MF sellers…we can handle this!
Amazon has been very quiet about this program. It won’t affect most of us, but it is sending waves of panic through the distribution community. If, for example, you provide electrical supplies to electricians or medical supplies to hospitals…you are very unhappy.
This is Amazon’s business-to-business site that will one day be the Amazon.com of B2B. They already provide over 2.25 million items compared to the average small distributor that offers around 50,000 SKUs. You may know that most contractors don’t buy their supplies from Home Depot, but do you know where they actually go? Small mom and pop distributors are usually in cheap industrial areas with no frills. They tend to specialize and run deep rather than broad. Their prices are better than a retailer because their costs are lower. Many of them are also selling online with the offer of in-store pick up or on-site delivery. Amazon can’t offer that, but with their ability to drive down prices and offer depth along with free 2-day shipping….they are going to be a huge profit source for Amazon one day.
Since most of us shop retail arbitrage, this won’t impact us. Like the Pantry, only Amazon sells on Supply. Unlike the Pantry, I found many items that were on both the Supply and the Amazon.com site. So while we can’t sell on Supply, we can offer our competing goods on Amazon.com – assuming we are approved for that category.
If you sell a lot of office supplies, you may want to check out Amazon Supply to see if you are competing with Amazon, but even so these are industrial office supplies in larger quantities rather than a box of paperclips. I doubt many FBA’ers sell reams of paper. Amazon Prime members get free 2-day shipping on about 100,000 items on Supply. In addition, Amazon Supply offers free 2-day shipping on orders over $50.
As a business owner, you may want to look at Supply as a source for your printer ink/toner, tape, packing paper, Dymo compatible labels or to have reams of paper delivered to your office. Amazon Supply also sells cardboard boxes for good prices and free shipping over $50…a great deal if you don’t live near an Uline.com. If you’ve always wanted to own an industrial kitchen sink or a 3-D printer…Amazon Supply sells it.
As a FBA seller, it is good to be aware that it is out there. If you have a line on new specialty hardware that you think would sell great to a business, check to see if it is already on Amazon Supply. Much like the Pantry, Amazon Supply is somewhat limited in its suppliers. In other words, it is not working with all the medical suppliers on the planet, just the big ones. If you have something that is special and not being sold on Supply, it might be sellable on Amazon.com – check with them before you drop a few thousand dollars. Depending on the item, you may not be able to sell it on Amazon.com because some B2B items are tracked and monitored. Sometimes it is required that the buyer prove they have permission to buy. On Amazon Supply, Amazon can handle this function as well as take line of credit payments, allow businesses to designate authorized buyers, fill orders by phone, offer certificates of conformance (for raw materials) and other services that some businesses require.
Amazon Supply can and does ship HazMat items that we can’t, which is another reason you may see something on Supply and not Amazon.com. Amazon Supply has been up and quietly running for about two years in beta. This means any impact from items being pulled to Supply has already happened. If you see a good rank on a Supply type item on Amazon.com, it is safe to assume that is going to stay that way. Unlike Pantry which shares the same buying audience as Amazon.com, Amazon Supply’s audience is truly different. They are unlikely to cross-shop for their businesses. They have accounts and purchase authorizations with Amazon Supply that they don’t with Amazon.com.
This is why I wanted to write this post – to reassure people that Amazon Supply is not something to worry about right now unless you are a mom and pop distributor. It might be a useful supplier for our businesses and won’t stop us from selling competing items on Amazon.com.
Did I overlook something important about the Pantry or Supply? Please leave me a comment below!