CPG eCommerce Intelligence: 7 Insights into Amazon's Prime Pantry

To coincide with the launch of our Amazon FastMovers reports, Profitero looks at Amazon Prime Pantry’s pricing, assortment, and best-selling products to see the depth of CPG eCommerce intelligence we can glean from Amazon’s growing portfolio of CPG eCommerce “formats.”

With the introduction of Prime Pantry in April 2014, Amazon took another key step forward in its always-evolving approach to building an economically sustainable model for CPG and grocery eCommerce.

Offered exclusively to members of Amazon Prime, Prime Pantry offers “low-priced everyday essentials in everyday sizes.” For a delivery fee of $5.99, Prime members can fill a box with up to 45 pounds or 4 cubic feet of products, choosing from a selection of more than 2,000 items.

Coinciding with the launch of our new Amazon FastMovers reports, Profitero took a look at Prime Pantry’s pricing, assortment, and best-selling products to see what we could learn about this pillar of Amazon’s growing portfolio of CPG eCommerce “formats.”

1. 18 of Amazon’s 100 best-selling Grocery & Gourmet Food products in November 2014 were eligible for Prime Pantry

It’s difficult to designate Prime Pantry a success (or failure) at this early stage.

But representing nearly 20% of the items on Profitero’s FastMovers report for Grocery & Gourmet Food products in November 2014, Prime Pantry certainly seems to be getting traction—at least within the context of the overall Amazon.com grocery business.

Among the best-selling products in November were staples including Kraft Macaroni & Cheese ($4.50, 2.6 lbs), Progresso Chicken & Homestyle Noodles ($1.25, 1.4 lbs) andNestle Pure Life purified water ($3.50, 28 lbs).

The program is designed for exactly these kinds of high-household-penetration products whose price points or price-to-weight ratios make Amazon’s traditional shipping model economically unviable.

2. Non-food products (household supplies, personal care, etc.) accounted for 38% of the Prime Pantry FastMovers list in November 2014, under-indexing their 46% share of all products in Prime Pantry

In addition to food products, Prime households seem to be stocking their pantries with everyday essentials like Tide laundry detergent and storage products from Glad and Ziploc.

Though non-food products’ share of the FastMovers list slightly under-indexes their share of the total Prime Pantry assortment, there are several non-food brands among the top 5 brands ranked by number of products represented in the FastMovers list for November.

Brands Ranked by # of Products in Profitero’s Amazon FastMovers report for Prime Pantry, November 2014

Source: Profitero

In fact, General Mills’ Nature Valley (3 products) and Progresso (3 products) are the only food products to place among the top 5 brands ranked by # of products appearing in the Prime Pantry FastMovers list for November 2014.

3. Prime Pantry’s best sellers are among the most consistent performers on Amazon

As a measure of a category’s relative stability, Profitero’s FastMovers reports monitor the number of “new arrivals” to a category’s list of best-selling products for a given month versus the previous month.

For November 2014, Prime Pantry ranked last among more than 35 top-level categories studied in the US, with just 3 “new arrivals” compared to October 2014.

Select Top-Level Categories Ranked by # of “New Arrivals” in Profitero’s Amazon FastMovers reports, November 2014

Source: Profitero

This isn’t entirely surprising given Prime Pantry’s relatively limited assortment (~3,500 products) and the absence of third party (3P) merchants.

But it does underscore the opportunity for manufacturers that succeed in securing distribution within the program, since it suggests that high-performing products in the program may face less competition than on Amazon’s broader platform.

4. More than three quarters (76) of the Prime Pantry products on the FastMovers list are sold in single packs

One of Amazon’s key promotional points for Prime Pantry is the availability of “everyday essentials” in “everyday sizes.”

With more than three quarters of the products in the FastMovers list configured in individual packages, or “eaches,” it seems clear that Amazon is working with manufacturers to offer products in smaller pack sizes, as opposed to the bulk (or “club”) packs more common in membership clubs some early observers expected to see.

5. 56% of the products offered on Prime Pantry are available from Amazon Fresh, compared to just 7% available on Amazon.com

Along with Prime Pantry, Amazon Fresh is another of Amazon’s key vehicles for selling grocery and CPG products.

Unlike Prime Pantry, Amazon Fresh is inherently local. The service, which offers a larger assortment of both shelf-stable and perishable foods (including chilled and frozen foods), is offered in Seattle, Northern California, Southern California, and recently expanded to parts of New York City and Philadelphia.

Despite many differences between them, Amazon Fresh and Prime Pantry share many of the same products, with more than half (56%) of the products offered on Prime Pantry also available on Amazon Fresh in the exact same configuration.

An additional 9% of Prime Pantry products are offered in like-for-like, or “LFL” configurations on Amazon Fresh—defined as the same product offered in a different size or pack configuration.

Percentage of Prime Pantry Products Available on Amazon Fresh and Amazon.com (1P Only) in Exact and Like-for-Like Configurations, October 2014

Source: Profitero

Note:

• *Food & Cooking is a composite of the Food & Snacks and Cooking categories
• “Exact” refers to identical products in the exact same configuration
• “LFL” refers to identical products sold in like-for-like configurations (different sizes)
• Amazon.com matches refer only to products sold directly by Amazon

In contrast, just 7% of Prime Pantry products were available from Amazon.com in exactly the same configuration. 16% were available in like-for-like configurations.

Personal care (76%), health & nutrition (60%), and pets (59%) were the categories with the greatest overlap between Prime Pantry and Amazon Fresh, with Baby (34%)

6. On exactly matched items, Prime Pantry and Amazon Fresh are priced almost identically

After seeing the relatively high degree of overlap between products offered on Prime Pantry and Amazon Fresh, we were curious about the comparative pricing between the “national” and “local” formats.

Amazon Fresh and Amazon.com (1P only) Price Index vs. Prime Pantry on Exactly Matched Items, August 21, 2014 – November 21, 2014

Source: Profitero

For exactly matched items, we calculated the price index relative to Prime Pantry for both Amazon Fresh and Amazon.com and found that Amazon Fresh was marginally cheaper compared to Prime Pantry.

On the relatively limited selection of exactly matching items available on both Prime Pantry and from Amazon as a seller on Amazon.com, however, Amazon.com indexed 32% more expensive. It seems likely that Amazon is trying to encourage customers to buy these products through Prime Pantry.

7. 95% of the Prime Pantry products on Profitero’s FastMovers list were priced below $10 in November 2014

Offering to help Prime households “save on the essentials,” Amazon references low prices in a description of the program’s details. And indeed, the prices appear to be low.

78% of products on Profitero’s FastMovers list were priced below $5, and 95% were priced below $10.

The average price of Prime Pantry products on the FastMovers list for November was just $3.91.