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Amazon Wants Cheerios, Oreos and Other Brands to Bypass Wal-Mart

30 March 2017

From Bloomberg:

Amazon.com Inc. has invited some of the world’s biggest brands to its Seattle headquarters in an audacious bid to persuade them that it’s time to start shipping products directly to online shoppers and bypass chains like Wal-Mart, Target and Costco.

Executives from General Mills, Mondelez and other packaged goods makers will attend the three-day gathering in May, Bloomberg has learned. Attendees will tour an Amazon fulfillment center and hear a presentation from Worldwide Consumer chief Jeff Wilke, who reports directly to Jeff Bezos.

Amazon is looking to upend relationships between brands and brick-and-mortar stores that for decades have determined how popular products are designed, packaged and shipped. If Amazon succeeds, big brands will think less about creating products that stand out in a Wal-Mart Stores Inc. aisle. Instead, they’ll focus on designing products that can be shipped quickly to customers’ doorsteps. Brands have been experimenting with such changes, so the Seattle event may well resonate.

. . . .

Amazon has been struggling to crack the food and packaged goods market—an $800 billion category still dominated by Wal-Mart and other traditional chains. Persuading brands to design their packaging and operations for the online world would make it easier for Amazon to ship common household goods to urban dwellers in less than an hour, potentially making last-minute dashes to the store obsolete. Amazon must convince brands that even though online purchases represent a small part of their sales, e-commerce is the future.

“Most of these people haven’t been interested in e-commerce because e-commerce has been such a small piece of their overall sales,” says Melissa Burdick, vice president of e-commerce at The Mars Agency marketing firm. “But we’ve reached a tipping point. We’re at a time when companies are ready to start figuring this stuff out.”

Amazon is looking to influence product makers the same way Costco and other club stores convinced brands more than 20 years ago to create bulk sizes sold at a discount.

Link to the rest at Bloomberg


24 Comments to “Amazon Wants Cheerios, Oreos and Other Brands to Bypass Wal-Mart”

  1. Gotta wonder how the Big Box B&M’s are gonna counter this! 🙂

  2. I can tell you right now, if Amazon makes a go of this, Costco is dead to my wife.

    • Same here. I’m an urban dweller, and this piece is telling me that my Special K can be delivered in an hour? I might still go to Trader Joe’s, because I like hearing the bells, but everyone else is dead to me.

      At Wegmans last week, the cashier put the water softener into the freezer bag, and then he tried putting it into the produce bag, right on top. I offered to bag my groceries myself, and he got annoyed. All of them–they’re all dead to me.

  3. Most of them should be easy enough, I know I could order most Sams items online (and quite a bit they didn’t keep in their local stores.)

    Price it right and save me a (8 miles each way for Sams, 13 for Costco) trip with finding/loading/unloading at the register/unloading into the car, to just bringing in a few boxes? Sounds like a plan.

    Would have to see if the shipper can ‘not’ turn a box of Ritz into bags of crumbs, but most of goods I buy should be able to handle even the rough shippers.

  4. Since B&M stores are already undercutting the national brands by selling their own “house brand” version of many foods, the nationals may see this as an opportunity to strike back. Or Amazon may create their own set of house brands if they don’t get what they want.

    • Those store, or house, brands are manufactured by the same companies (ex. Lucerne), using the same raw products, that manufacture products for the CPG companies (General Mills, Procter & Gamble, etc).

      Take Cheerios off my local United’s shelves? Go right ahead. I’ll buy the “knock-off” in the bag or as the store brand instead of order online. I’m not brand loyal when it comes to most edibles.

      We order a lot from Amazon, but it’s usually non-food products. As I said in another comment below, I prefer to personally inspect the foods I buy before I buy them.

  5. “Amazon must convince brands that even though online purchases represent a small part of their sales, e-commerce is the future.”

    This sentence astounds me. Have these companies not heard of the music industry? The publishing industry? Taxi services? Classifieds? Dating? and on and on and on… Do they really think that this stuff won’t touch them ever?

    There are more than enough examples now that any industry which needs to be “convinced” by Amazon is basically signing its own death warrant.

    • It’s a tough pill to swallow. Egos and pride won’t let it happen until it’s too late.

      • @ Paula

        “Egos and pride won’t let it happen until it’s too late.”

        But thin wallets might!

  6. for the many people who do not have internet access, this will be a huge hardship to not have a walmart, and other lower cost places near to where they live. Here in the west, walmart and target in rural nearby areas also stock ranch supplies, some feed, and small equip. I dont know what to say about getting things in an hour. Not sure we want certain things fast, rather that they be built well, work right the first time, have strong customer support by the maker.

    I can see that brands could stay alive instead of at kroger/target, more and more disappearing brands as they make their own often inferior store brands of same items

  7. I wouldn’t want to buy those items in bulk because I don’t have a lot of storage at my house. It’s why I also may not renew my Costco membership this year. There have been times when I would buy groceries from the Pantry, but having to fill a big box to make it worthwhile made it impractical for me.

    • It’s a similar thing for single people. I’m only ever cooking for one, and won’t buy anything in bulk that I can’t use before the sell-by date, or that won’t fit in my freezer. I do love Costco, but only buy nonperishables there.

      • I’m single, and not even cooking for one since most of my meals come from restaurants. Never got the cooking gene. It skipped a generation from my mom, bypassing me and going straight to my daughter who’s a terrific cook.

    • WE got a Costco membership when hubby needed tires. Never went back in the rest of the year. I WANTED to take advantage, but the parking lot was always jammed, the lines long, and I have no more room for stocking bulk. But mostly the lines and parking lot. Ugh.

      • I always park on the outer boundaries of the parking lot to get a little exercise. The lines aren’t long when you go in the early afternoon on weekdays — at least not at my local Costco. There’s a second Costco in our area that is always jammed with cars. They put the store in a shopping strip that has too few spaces. I don’t think they planned for as much popularity as they got.

        A tip about renewing your membership: they send out a mailer warning you it’s time to renew, but it’s far in advance of your renewal date. If you renew when getting the mailer, that’s your new renewal date. You lose a couple months of your year-long renewal. Seems slimy to me. A friend used to stock up in his last month of membership, then wait till he used up everything before getting a new membership. He’d end up with a couple months “free”.

        • We didn’t renew. And this is not a big parking lot. It’s full to the brim, they double park. I think they must blow crack into the air to have folks even on weekdays shopping like mad. They should extend hours, methinks.

  8. Aside from spiced chai, there’s nothing I need by way of food or drink faster than running two blocks down to the grocery store. I can even wait if we *have* to make the 70-mile round trip to the city and a larger store.

    I prefer to inspect my groceries; fresh, boxed, frozen, or canned.

    • A+ Scath, inspect groceries. Yes.

    • This. I can walk to the store in ten minutes. I can drive to Wally World in about the same amount of time. I don’t order food online unless it’s some specialty baking thing, and that doesn’t happen often. They’re all focused on urban areas and that’s great for the urban folks, but the rest of us do not, and probably never will, get that kind of delivery time.

  9. Al the Great and Powerful

    Out here in mid-pacific, we don’t get stuff overnight, let alone in an hour. Paula Gouveia, you are straight tripping. The Zon doesn’t even pretend to meet that kind of shipping speed here.

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