Albertsons launches an online marketplace for small CPG brands

Discussion
Source: Albertsons Companies
Mar 21, 2018
George Anderson

Albertsons is looking to give small consumer packaged goods brands a boost. The company, which owns Safeway, Von’s and a variety of other banners in addition to its namesake supermarket chain, announced the launch of a digital marketplace where smaller companies can sell and ship their food and over-the-counter wellness products directly to consumers.

“If you’re a small player with a very good product or a big consumer packaged goods company with a small unit, you will struggle to get the attention of some of our larger banners,” Narayan Iyengar, senior vice president of digital marketing and e-commerce at Albertsons, told CNBC.

When an order is placed on Albertsons’ marketplace, the company processes the payment and deducts a commission before depositing the rest into the vendor’s account. The vendor then dropships the ordered items directly to the customer. Sellers manage customer service through Albertsons’ platform.

The data from transactions on the marketplace is expected to benefit both vendors and Albertsons. Suppliers can use it to gain customer insights and, if performance warrants, make the case for shelf space in the company’s various grocery chains. Albertsons will also gain insights into the shopping behavior of its customers.

The marketplace announcement comes weeks after Albertsons announced a definitive merger agreement with Rite Aid. With the addition of the drugstore chain, Albertsons, which is privately owned by a group led by Cerberus Capital Management, will operate around 4,900 locations with 4,350 pharmacies and 320 in-store clinics across 38 states when the deal is complete.

Earlier this year, the company debuted Albertsons Performance Media, a platform developed to give CPG brands a way to connect digital ad performance with sales activity.

DISCUSSION QUESTIONS: What value do you see in Albertsons’ digital marketplace for vendors and the grocery retailer? What do you see as the biggest challenges the parties will face in operating and participating in the marketplace?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"If you aren’t going to make the effort to put these products in store, what makes you think I’m coming to buy them in your endless aisles?"
"This seems like an easy, low hanging fruit decision for Albertsons to make at low cost with the potential for high rewards."
"If marketed right, this might give Albertsons the opportunity to create their own Etsy type department to woo new customers..."

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14 Comments on "Albertsons launches an online marketplace for small CPG brands"


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Phil Chang
BrainTrust

If you aren’t going to make the effort to put these products in store, what makes you think I’m coming to buy them in your endless aisles? I don’t think today’s consumer is going to find this compelling at all. If I were a small CPG, I’d probably do this to help with search, but I wouldn’t be holding my breath that this is going to net into anything but an occasional, accidental sale.

Today’s consumer has multiple choices for purchasing product. They’re not choosing any old place to buy things — they need peer feedback, reviews, an expert to talk to and friends and family to chime in for them to purchase items. Sorry Albertsons — this doesn’t cut it.

Joel Rubinson
BrainTrust

Some plusses and minuses here. On the plus side, shoppers love to discover new things and this helps to create a sense of discovery — almost Target-like — at Albertsons. Always felt retailers should feature what is new for a month. Shoppers would like it and the retailer could get additional trade funds.

On the negative side, a retailer places their reputation on the line with every product they sell. Albertsons should make sure there is a vetting and inspection process that is as rigorous as a buyer would use to put something on the shelf.

Jon Polin
BrainTrust

This just makes sense! While the volume is unlikely to move the needle for Albertsons, it offers several additional benefits: 1) Albertsons gets real data on emerging brands/products, which enables Albertsons to identify up-and-comers and to merchandise their products before others, 2) this generates goodwill with emerging brands who should in turn show some love back to Albertsons as those brands grow, 3) this shows Albertsons shoppers that their store is innovating with both technology and products. I’ve expected grocery chains to offer this service for a long time, and I now expect that others will follow Albertsons’ lead.

Art Suriano
BrainTrust

This program is an excellent idea and should be successful for both Albertsons and the small CPG companies. There is no real investment here which makes this much easier to work. Both the CPG company and Albertsons make money after the sale. In some ways, it is similar to how Apple, through iTunes, allows thousands of independent artists to register their albums. When they sell one, Apple takes a commission. What’s important is how the small CPG company can market themselves and generate awareness to get the customer’s attention to try their products no differently than that unknown band attempting to get the listener hooked on their music.

Albertsons, like Apple, will be successful because the onus will be on the small CPG to entice a customer to buy their products. But when the small CPG company has something worth buying and knows how to promote their products, this program provides that CPG company a chance they ordinarily wouldn’t get, just like the independent, undiscovered music group.

Dr. Stephen Needel
BrainTrust

I’m confused — are they trying to be Amazon.com or Walmart.com? I’m not sure what they are bringing to the game unless Amazon and Walmart won’t take small, untested brands.

Max Goldberg
Guest

With Whole Foods moving towards centralized buying, there are fewer ways for small brands to get their products in front of consumers. This effort by Albertsons may provide that opportunity. Perhaps some of the better performing brands will then be sold in physical stores.

Dan Frechtling
BrainTrust

This is a gain for large CPG firms, who have a new proving ground for launches and, over time, a new sales channel. They have logistics and marketing functions to support “thin” marketplaces.

This will help certain small food and wellness vendors, but not cottage outfits that rely on marketplaces for packing and direct-shipping services (Albertsons isn’t offering them yet), customer service operations, and online advertising.

Like all battles, the armament sellers have the most to gain. Now that both grocery suppliers and retailers are moving their rivalry online, those in the supply chain and real estate sectors, including delivery services and climate-controlled distribution centers, will be large beneficiaries.

Lee Kent
BrainTrust

If marketed right, this might give Albertsons the opportunity to create their own Etsy type department to woo new customers or simply bring loyal customer back more often. They would absolutely need to vet each product and stay on top of customer feedback and interest. The biggest challenge I see is in delivery. Will these small CPG brands be able to deliver and meet the standards that the Albertsons customer expects? And that’s my 2 cents.

Dave Wendland
BrainTrust

Properly curated, this assortment of smaller brands may fare well for Albertsons. Of course, access should not be limited to shoppers stumbling across the site in an online setting only. I believe integration and visibility within their brick-and-mortar operation is imperative. As well, the product content needs to be relevant, consistently-presented, organized well, and purposeful to the shopper.

Rebecca Fitts
Guest

The demand from consumers for local and indie brands is at an all time high and Albertsons is reacting. Also the barriers to working with big box stores and department stores has always been difficult — this seems like it will help begin to rectify the process. I do agree with my colleagues: it probably has more impact in store than online — almost like a needle in a haystack to find. They could take a page out of Target’s playbook.

Ricardo Belmar
BrainTrust

This seems like an easy, low hanging fruit decision for Albertsons to make at low cost with the potential for high rewards. Will it succeed? I’m just not sure a grocery brand is where consumers will think of to go for these products in a marketplace-like environment. However, the idea is sound and if they properly market it, their customers should respond well to it.

Craig Sundstrom
Guest

Obviously this is an aggregation issue. Collectively, Albertsons’ customer base might be able to support product offerings that no single (physical) store could. The problem, of course, is that I don’t think Albertsons (or any supermarket’s, really) website is something people see as a buying tool. Once a retailer tries to compete in the locationless world of online, it loses its biggest advantage … being “local.” While I wish them well, I don’t really see this as a competitive edge, for either party.

Vahe Katros
Guest
Vahe Katros
1 year 4 months ago
Food is like music and there are some great brands and bands in the long-tail. In fact, I regularly torment my friends about them as in: Friend: “Enough Vahe, I’ll go to Whole Foods, Laudemio Olive Oil, got it.” Vahe: “You have no idea, just lettuce, that’s it, and the salad is amazing. Oh and go to Amazon and please, please order the Timeless Foods Black Beluga Lentils, you will die they are so great … do you like Orzo…? You get the drift and to be sure, I’m not a foodie, I just like What The Foodie (WTF) likes and my friends apparently agree, they’re always like: WTF Vahe but look, the point here is related to something start-ups know: it’s better to have a small group who love you vs. just like you because from love comes word of mouth marketing. Facilitating the long tail is sharing the love of brands that don’t sell enough records to make it to the shelf. Finally, I looked at their marketplace site and didn’t see a… Read more »
Christopher Jordan
Guest

Moves towards differentiated, independent brands (when well executed) tend to be winners. Executing means building a position around curated assortments that are truly unique, differentiated, and speak to shared values with the consumer — think vegan, paleo, non-GMO, etc. To Stephen’s point, you aren’t going to out-Amazon Amazon based on sheer volume of assortment.

Stealing the “search” user from Amazon is a near-impossible task, but the “browse” user is very much up for grabs. The trick to getting the share of these users isn’t blindly going for sheer numbers for the sake of numbers (a number of similar retail programs have sputtered going this direction) — it’s getting a smaller, oft-updated, very tightly curated assortment.

wpDiscuz
Braintrust
"If you aren’t going to make the effort to put these products in store, what makes you think I’m coming to buy them in your endless aisles?"
"This seems like an easy, low hanging fruit decision for Albertsons to make at low cost with the potential for high rewards."
"If marketed right, this might give Albertsons the opportunity to create their own Etsy type department to woo new customers..."

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