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[9 comments]

Amazon opens its pantry program to Prime members

April 25, 2014

Back in 2008, BJ's Wholesale Club responded to competition from larger rivals Costco and Sam's Club by offering smaller-sized products that focused more on the needs of individuals rather than companies. While it did not catapult BJ's to the top of the warehouse club mountain, it did provide a definable point of difference from its competitors. Now, Amazon is looking to do something similar, albeit online, with its new Prime Pantry service.

In short, the service allows Amazon Prime members to order smaller sizes of products that previously were sold in bulk on the site. Prime members can now fill up a four-cubic-feet box with merchandise weighing up to 45 pounds. Orders will take between one and five days to arrive and come with a $5.99 delivery fee. Fresh foods are not included in the offer.

Amazon takes this step as a growing number of retailers are looking at same-day delivery of grocery items. The company's AmazonFresh program charges customers an annual fee of $299, which includes membership in Amazon Prime and free grocery deliveries on orders of $35 or more.

[Image: Amazon Prime Pantry]

FINANCIALS:     [NASDAQ:AMZN] [ ]

Discussion Questions:

Will consumers see Prime Pantry as a good deal? How does this program fit in with all of Amazon's other grocery initiatives?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is Amazon's Prime Pantry program to succeed?

Comments:

I think supermarkets should be afraid - very afraid. Amazon is attacking the supermarket product mix from multiple positions, Prime Pantry being the newest. As colleagues here have stressed in previous discussions, supermarket center store items are most vulnerable to m/e-commerce competition. Prime Pantry is clearly an assault on that part of the store.

And I do believe that the marketing video is a reasonable representation of how people will use the service until AmazonFresh and Dash become available to them. Then all bets are off, as consumers will have multiple ways to skip local stores that haven't adapted to the new consumer mindset.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

Another step from Amazon to define and enhance the benefits of prime membership. Prime Pantry offers convenience and meshes well with Amazon Fresh. Amazon wants to dominate retail. They are steadily moving in that direction.

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Max Goldberg, President, Max Goldberg & Associates

The fastest growing consumer segments will see Prime Pantry as a good deal. Others may not. The marketplace is fickle but it is progressive.

Amazon appears to have it eyes focused on the grocery sector. Its hands are at the controls and Prime Pantry's time has come. But it is still true that changes such as Prime Pantry and Amazon's other grocery initiatives are sound and certain ... successful and profitable progress is not. At least, not yet.

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Gene Hoffman, President/CEO, Corporate Strategies International

It seems to me this program is the right idea, but has a long way to go before it's ready for "Prime Time" (pun intended). Amazon has trained legions of shoppers to shop one item at a time and expect all-you-can-eat, 2 day shipping included with Prime. Now comes Pantry that solves for some of Amazon's logistical issues. But does it really help the shopper? Will you pay an extra $6 just to have access to product configurations that are already available at the local FDM store? And wait 4 days for it?

This may be a test and learn for Amazon. The next gen may be a brick & mortar killer, but retailers for now can remain worried about Fresh/Dash, Subscribe & Save, and Prime, before they worry too much about Pantry.

Daniel Silverman, Vice President, Business Consulting Services, Clavis Insight

Prime Pantry isn't free, but it is of great value to the busy person (or family) that may not have time to make the typical run to the grocery store. I like the idea of of paying a few dollars for delivery of staple items, dry goods, non-parashables, etc. In this day and age, people will pay for convenience. Time is a valuable commodity and Amazon is showing its customers that they recognize that.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I'm not sure it's a good deal but for a certain sector of the Prime audience, this idea does provide the extra value they are willing to pay extra to receive.

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Larry Negrich, Vice President, Marketing, nGage Labs

When I have small items that I don't want in bulk from the Subscribe & Save shop, I just wait to add on to an over $25 order. I can't imagine having had free shipping pounded into my head for the past few years just to turn around and to start paying now.

As an analyst, I understand what Amazon is trying to do; as a consumer I'm pretty darn entrenched in my existing shopping habits and so far none of Amazon's recent attempts to shift those (Dash, Flow, and Pantry) are going to change me. Here's to hoping that more of Amazon's customers AREN'T like me.

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Kelly Tackett, Research Director, Planet Retail

Amazon is clearly trying to triangulate and hit the grocery retail sector from various angles. Remains to be seen if all of this will be profitable for Amazon remains to be seen, but whether it is or not, these efforts will continue the dispersion of opportunities to purchase food and related items that is going on in the grocery space.

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Brian Numainville, Principal, The Retail Feedback Group

Many shoppers will see the value of this program - a real convenience for the pantry staples we purchase regularly. The restocking trip is repetitive and time consuming for these repeat purchases - this makes it easy and the price seems fair. Since most of us purchase only 200 - 300 SKUs annually, from the 30,000 to 100,000 on offer in larger stores, this may be another good step forward for Amazon. Time will tell if they can continue to raise the bar for other grocery etailers.

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

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