Supply chain · 3 July 2017

Selling to AmazonFresh: On-demand delivery with an open door to new brands

A total of 302 postcodes in the South East of England now have access to AmazonFresh, with further expansion expected

A year since serving its first UK customer, Amazon’s on-demand grocery delivery arm has been adding variety to its offering at a faster pace than competitors. With a significant presence of new challenger brands, we look at what smaller suppliers need to know before selling to AmazonFresh.

Starting out in an initial 69 London postcodes, Amazon recently announced expansion of AmazonFresh. Now, 302 postcodes in the South East of England have access to the 180,000-strong (and counting) product selection.

For third-party sellers on AmazonFresh’s Local Shops & Markets section, the process is broken down into three stages: list products online (with full control of prices and inventory); receive daily order lists (with packaging provided by Amazon); leave produce at a local drop-off point for customers to receive same or next-day.

Initiating the partnership is put equally simply by Amazon – officially, the only eligibility criteria is legal registration at Companies House and accredited food standards. Unlike many high street staples, Amazon makes it straightforward for suppliers to make the first step.

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Natasha Bowes’, founder of probiotic “Kefir” milk brand Bio-tiful Dairy, has been a regular AmazonFresh vendor since the end of 2016. One of Bowes’ colleagues had worked with somebody on the inside, and her introduction came via a direct email. While industry contacts have always delivered vital in-roads for suppliers, could more opportunities be opening in the on-demand space?

“My impression was that the door is open as far as new products are concerned,” Bowes told us. “If you have a good product that is on trend, you stand a good chance.”

The trend in question refers to the growing demand in Britain for healthier food, whether it is organic, gluten-free or responsibly-sourced. Healthy eating entrepreneurs are seeing the greatest demand for a decade, as consumers opt for quality over price.

Bowes confirmed AmazonFresh was committed to finding the next big brand, whether in organic produce or vegan alternatives.

“Absolutely, that was very clear. What they are going for are the right types of products, making it very easy for people to get the listing. Partially because the buyers see the success of a product on Ocado, which is the most direct competitor.” she explained.

Natasha Bowes founded her Kefir milk brand 2012
Natasha Bowes founded her Kefir milk brand 2012

One AmazonFresh campaign putting startup brands at its fore is Foodie Trends, a curated promotion offering customers the “newest and coolest” produce, from the coconut-based to high protein.

A recent study, by analytics firm Profitero, claimed US AmazonFresh customers were more likely to choose niche brands over household names after a concerted effort by the retailer to push market challengers.

Elaborating on the somewhat open-door policy for smaller brands, Bowes pointed out the fundamental difference between AmazonFresh and physical food and drink retailers.

“It’s reflective of the simple fact that they don’t have supermarket shelves to worry about – the virtual space is unlimited. The complexity shifts into a completely different paradigm. With AmazonFresh, what happens once you’re in is a much bigger question, rather than getting in,” she noted.

One task for those selling to AmazonFresh is finding exposure and a route onto landing page “ailes”. Nonetheless, AmazonFresh is responding to consumer trends through its stock and shopping experience.

Anna Richey and Alla Ouvarova, co-founders of Two Chicks, a brand influenced by the use of liquid egg whites in the US for both dairy products and snacks, agreed the online-only method shouldn’t deter other founders. “The process is relatively easy,” Richey told us, acknowledging it did mark a break from traditional retail.

“The training courses they offer to new suppliers are very useful and informative as to what needs to be done to setup and trade efficiently with Amazon,” she added.

The duo have been selling Two Chicks through AmazonFresh since October 2016, and believe the site’s healthy outlook and pursuit of market entrants are of great benefit to new brands.

“It offers an alternative route to market from conventional retailers, giving you the opportunity to reach customers you might not be able to access via conventional retail channels,” Ouvarova said.

The shipping model for Local Shops & Markets suppliers is a key differentiator between selling to AmazonFresh and a traditional supermarket. Suppliers drop their orders off to Amazon, which in turn delivers the “basket” in one go to the customer. Customers are not obliged to meet a minimum order, and orders placed before 10am are guaranteed same-day delivery.

Amazon’s guidelines make the arrangement look straightforward, but a small business could find the on-demand model more volatile than typical retail supply chains.

Two Chicks now offers a range of egg white-based products
Two Chicks now offers a range of egg white-based products

Owing to her brand’s sophisticated distribution arm, fulfilling orders hasn’t been an issue for Bowes. However, she offered pointers for fellow entrepreneurs with ambitions of an AmazonFresh partnership.

“I would imagine unless you are well set up logistically as a business, it will be challenging dealing with small batches, reflecting the orders of AmazonFresh customers. Amazon will be trying to supply those orders as quickly as possible.

“We aren’t a large business, but all our products go through our central logistical partner, who deliver on our behalf to AmazonFresh and many others. It gets consolidated so Amazon can order with us as it pleases and receive next-day delivery,” she explained.

That level of distribution will be unrealistic to many micro operations, and Bowes emphasised the importance of high sales volume in making the arrangement worthwhile.

Reflecting on their ability to meet the demands of AmazonFresh, the Two Chicks founders highlighted wider changes in retail. “There is not a huge amount of difference between supplying an on-demand service” Richey said. “Order to delivery lead times have reduced with all retailers across the board.”

For founders without industry contacts, persistence has been a running theme throughout our series in finding the right people to secure a listing. Many brands have reached shelves from scratch, and Richey again championed this approach.

“Email the appropriate buyer, then have their number on redial. Don’t give up until you get a meeting in the diary. Always go that extra mile – perseverance will get you everywhere,” she advised.

Further advice from the duo was to get a firm handle on the AmazonFresh business structure and how it works logistically before making an approach.

While sales haven’t quite matched other online food retailers for Bio-tiful Dairy, Bowes maintained AmazonFresh was “a wonderful brand to be associated with” as a healthy living entrepreneur.

Recent expansion suggests Amazon is ready to invest further in AmazonFresh. The service has given small food and drink brands a clear path to keep up with shifting consumer trends, and it might well be worth overlooking potentially slow sales and tricky online systems.

Want to learn more about getting your products stocked with other major UK retailers? Go back and read some other features in our “Selling to big business” supply chain series.

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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