Food Entrepreneur: The Impact of Amazon
As a result of many food start-ups choosing Amazon.com as their initial channel to market, the retail industry is changing. The so-called “digitally native” businesses avoid the slotting fees, shelf space constraints, merchandising resets, and other challenges faced by physical grocery stores. Instead, they benefit from several strategic advantages that have unsettled the competitive field for traditional brands.
The website reports that Nutpods, a brand of unsweetened, non-dairy creamers, has surpassed larger brands like Nestle’s Coffee-Mate and Danone’s International Delight to become the top-selling product in its category. After being chosen from 1,300 applications, the Bellevue, Washington, startup was named Amazon’s Small Business of the Year in 2019. Since its inception in 2015, sales have increased by 5,500% on the website.
The creator and CEO of Nutpods, Madeline Haydon, stated that the company had previously created buzz from a crowdfunding campaign a few years prior. The endeavor contributed to proving the concept’s viability as a shelf-stable half-and-half substitute, based on a blend of almond and coconut with no added sweeteners and natural flavors.
With a three-year increase of 11,623% and $19.1 million in revenue in 2018, the brand ranked No. 13 (No. 2 among all food and beverage firms) on the 2019 Inc. 5,000 list of fastest-growing companies last year. With just 24 workers, the business accomplished this.
According to Ms. Haydon, “the ability to scale (on Amazon versus traditional retail) cannot be overstated.” “If you wanted to start selling $100 a day on Amazon, you could start selling with just one person who could back your sales. But when you’re selling $100,000 a day, that one individual is working the same job.
To get ready for a larger push into retail outlets, Cali’flour Foods collected data and input from internet shoppers. The company, located in Chico, California, sells a variety of frozen pizzas and pizza crusts that are made with cheese, eggs, and cauliflower.
Founder and chief executive officer of Cali’flour Foods Amy Lacey remarked, “Going online allowed me to get all the kinks out.” It’s more understanding than a supermarket. If you are expelled from a grocery shop, you will never be let back in.
Products made with Cali’flour may be found all over the country at reputable stores like Walmart, Whole Foods Market, and Kroger, but according to Ms. Lacey, Amazon has the greatest reach, especially when it comes to up-and-coming brands.
Within 24 months, Ms. Lacey stated, “we literally went from negative $269,000, which is getting started — there are a lot of fees in the beginning of launching a new product.” “And Amazon had a significant role in that.”
The extent of the virtual award
Online grocery sales are expected to account for $20 billion, or 20% of all retail grocery sales in the US, by 2025, according to some projections. According to a recent Nielsen prediction, the amount is $143 billion. According to Nielsen, 54 million households in the US made online purchases of food and drink in 2019, an increase of 14% over the previous two years.
With $8.2 billion in sales, Amazon.com Inc. leads the online grocery market, followed by Walmart ($2.44 billion) and Kroger ($1.51 billion). In contrast, Target has $423 million in online food sales, according to co-author of “The Amazon Roadmap” Betsy McGinn.
Vendor Central, where products are sent and sold by Amazon, Seller Central fulfilled by merchant, where products are shipped and sold by brands, and Seller Central fulfilled by Amazon, where products are shipped by Amazon and sold by brands, are just a few of the platforms that Amazon provides for brands to sell finished goods. Speaking at a class held on January 20 at the Winter Fancy Food Show in San Francisco, Ms. McGinn explained that each choice has different advantages and disadvantages.
Additionally, startups can apply to be a part of Amazon Launchpad, which offers early-stage companies worldwide infrastructure, education, and merchandising. The program provided marketing exposure and organizational support for the meal replacement brand Soylent, according to Ben Knox, head of digital retail at parent company Rosa Foods.
According to Ms. McGinn, the key elements of an effective Amazon approach are product viability and visibility. Pack size, price range (preferably $15 to $40), and packaging that is recyclable, simple to open, and content-protecting should all be taken into account by brands. Online buyers are particularly drawn to variety packs and multipacks, according to the source.
Images and videos that clearly describe the product and brand should be included on a product page, along with basic and enhanced product details. The description of a product should be brief and contain keywords that could make the brand stand out in an online search. Cali’flour Foods employed keywords like “gluten-free,” “grain-free,” and “low-sugar” to drive visitors to their page before the recent cauliflower trend.
According to Ms. McGinn, “69% of customers will leave a product page due to a lack of information.” “A lot of people believe that individuals abandon products because they find the price to be too high. Actually, it isn’t the case. When was the last time you visited an Amazon website and were unable to determine if you were purchasing three or thirty of anything based on the title, bullet points, or picture? For $30, did you purchase a single item or a case? Having your content and shelf looking fantastic is crucial.
On Amazon, Cali’flour Foods has a landing page with product descriptions, recipe ideas, and the founder’s biography. Recently, the company produced a video showcasing how it uses the roots and stems of cauliflower to cut waste and boost the nutritional value of the product.
According to Ms. Lacey, “Amazon has developed all kinds of programs to help tell your story.” You have the option to upload videos and create a comprehensive product landing page on Amazon. You are unable to accomplish those things in a store. In a store, a coupon and a price cut are both possible. However, it is impossible to educate individuals.
According to Ms. McGinn, a “continuous drumbeat of marketing” is required to be found among millions of products. To advertise their products, brands may employ discount codes, coupons, subscribe-and-save options, and “lightning deals.”
Ms. McGinn asserted, “You don’t have an Amazon business if you don’t do marketing.” “It’s becoming more competitive and costly, but the incredible things that basic pay-per-click marketing can accomplish for you will make you famous.”
All set for the big screen
Sales on Amazon are largely dependent on reviews and a brand’s response to them.
According to Ms. McGinn, “negative reviews can be a great source of information.” “Don’t assume that the customer is only ignorant of the subject. Make use of such data to guide your brand’s actions and your response to reviews; don’t disregard bad ones. especially reviews with one star. It is imperative that you communicate with them.
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Over 10,000 reviews and a 4.5-star (out of-five) rating have been created for Nutpods. According to Ms. Haydon, reviews have assisted the business in improving both its product and go-to-market approach.
“You can learn about what your customers are saying through your reviews, which is something you can’t get from the grocery store,” the woman stated. You will not receive the comments. They simply won’t buy from you again, but you won’t know if that’s due to your price, taste, unappealing packaging, or anything else.
“You must seize the chance to educate yourself. You run the danger of the market telling you that there is a need not being met by your offering.
She went on to say that maintaining a company’s reputation and fostering consumer loyalty depend heavily on how it deals with online customers and reviews.
“Investors read all of your reviews when it comes time to raise capital,” Ms. Haydon stated. “If a company receives unfavorable evaluations and receives no response or acknowledgement, that speaks volumes to them. Reviews are a really helpful resource.
In the end, companies ought to provide a product that closes a gap in the market. When there were no comparable commercial possibilities, Ms. Lacey and Ms. Haydon created items to satisfy individual dietary preferences.
“People were naturally looking for a vegan coffee creamer, paleo coffee creamer, Whole30 coffee creamer, gluten-free coffee creamer, or keto coffee creamer when we launched in 2015,” Ms. Haydon said. “The difficult aspect for small brands is not finding their way in the digital world. Making a product that follows every trend at once and makes people naturally seek it out is the difficult part.