How to Grow your Business with

April Lane Category Leader, AmazonFresh

June 14, 2017 1 7/7/2017 Confidentiality: We want you to learn more about our business. The information we are sharing with you is confidential.

We ask that this presentation and its contents be shared with folks in your company on a need to know basis. Description: This is an Amazon 101 for specialty food: Learn how your brand can reach Amazon’s customers, what it means to be a vendor vs. a seller, and how you can sell everything from ice cream to maple syrup on Amazon.

Agenda: Amazon Overview Consumables Formats Why E-Commerce? How to Work with Amazon Amazon Overview “This year, Amazon became the fastest company ever to reach $100 billion in annual sales… What’s going on here?...customer obsession rather than competitor obsession, eagerness to invent & pioneer, willingness to fail, the patience to think long-term, and the taking of professional pride in operational excellence.”

– Jeff Bezos 2015 Letter to Shareholders Amazon’s Mission

“To be Earth’s most customer-centric company where people can find and discover anything online.”

Price Selection Convenience

Amazon confidential 6 Amazon’s Retail Vision: Flywheel

Create strategic, long-term vendor relationships enabling our virtuous cycle of value, selection & convenience

AMAZON CONFIDENTIAL 7 Amazon Continues to Outpace E-Commerce Growth

“Amazon’s customer- 28% centric focus continues to pay reputation dividends as it dominates both Emotional Appeal 14% and Product and Service dimensions.”

The Harris Poll 2014 RQ® Summary Report 1.4% Amazon Q1 2016 E-commerce Retail Growth 3 YoY Growth 2 Sales Growth1

Note: Retail growth does not include travel Sources: 1. Internet Retailer, “US e-commerce grows 14.6% in 2015,” February 17, 2016 2. Amazon Investor Relations, “Amazon.com Announces First Quarter Sales up 28% to $29.1 Billion,” April 28, 2016 3 Internet Retailer, “US e-commerce grows 14.6% in 2015,” February 17, 2016

Amazon confidential 8 Amazon.com Reach

Source: 1) Q2 2016, Amazon Internal 2) December 2016, comScore – US and UK data, 3) 2016, m-Commerce Measurement & 1010data, market insights.

Amazon confidential 9 Amazon Consumables Formats “We can’t be a $400B retailer without a strong consumables business”

– Jeff Bezos

Amazon confidential Amazon Consumables – Program Overview

BUYING IN BULK BASKET BUILDING SAME DAY GROCERY DELIVERY 1-2 HOUR DELIVERY WHAT’S NEXT?

• Everyday purchases & one-time • Prime members only • Prime members only • Prime members only

buys • Build a basket • Full line grocery • Shelf-stable and select

• Subscribe & Save • $5.99 box fee • Traditional pack sizes perishables items

• 12 million daily visitors • Curated selection • Leading local selection • $15-$20 min. order

• National distribution • National distribution • $14.99 monthly membership • 30+ cities

• 14+ metropolitan regions

Higher ASP Reduce ASP Higher ASP Greater Inventory to More Inventory Closer to the Greater Inventory to Customer Distance Customer Customer Distance Faster Delivery SlowerSlower Delivery Speed Speed SmallerSmaller Share of of Wallet Wallet Increase Share of Wallet

7/7/2017 AMAZON CONFIDENTIAL 12 Amazon Grocery: Traditional Amazon.com + Subscribe & Save

OVERVIEW

• Grocery products in bulk sizes, shipped directly to your door. • Subscribe & Save • Robust retail and 3P selection

AMAZON CONFIDENTIAL 13 Prime Pantry: Low-priced Everyday Essentials in Everyday Sizes

SELECTION VALUE

Shop Everyday Sizes: Prime members can shop for Save on the essentials: Low prices and hundreds of groceries and household products in everyday package coupons sizes (for example, a single box of cereal) with Prime Prime Pantry also offers FREE shipping with 5 qualifying Pantry. Prime Pantry allows Amazon to expand its selection and offer thousands of items to Prime Members items (out of a selection of thousands) or you can also get that are cost prohibitive to ship for free individually. Prime Pantry items shipped for a flat 5.99 delivery fee per box.

AMAZON CONFIDENTIAL 14 AmazonFresh: The Ultimate Time-Saving Solution

SELECTION CONVENIENCE VALUE

Food and Consumables: Complete Depending on region, delivery in a Membership Fee: $14.99/month grocery store selection including minimum of 6 hours Delivery: No delivery fee for orders perishables, produce, prepared Attended Delivery: In-person over $40 meals, and ambient center store delivery or totes can be left with a Local Market: Unique selection from doorman. iconic regional local merchants Unattended Delivery: Groceries will Amazon.com: Thousands of be left in temperature controlled totes Amazon.com items available on the doorstep for pick-up at the customer’s convenience. AMAZON CONFIDENTIAL 15 Fresh Regions:

2007 Seattle

2013 Southern California (Los Angeles, San Diego) Northern California (San Francisco, Sacramento)

2014 New York/New Jersey/Southern Connecticut Philadelphia

2016 Baltimore Boston Washington DC & Northern Virginia Dallas Chicago Atlanta

2017 Miami Milwaukee Denver

7/7/2017AMAZON CONFIDENTIAL 16 AmazonFresh Pickup: Groceries delivered to your trunk

AMAZON CONFIDENTIAL 17 PrimeNow: 25 Thousand Essentials Available in an Hour

SELECT FROM HOUSEHOLD ESSENTIALS & ORDER AT YOUR FINGERTIPS AMAZON FAVORITES FREE 2-HOUR SCHEDULED DELIVERY

Prime Now began as an application- Prime Now offers a wide selection of We offer one- and two-hour delivery only experience and launched a grocery items including milk and ice with both attended or unattended desktop browser in May 2016 cream, beverages and household delivery options. Two-hour delivery is supplies in addition to TVs, toys, free and one-hour delivery is $7.99 apparel, and more.

AMAZON CONFIDENTIAL 18 Amazon Go Overview: Just Walk Out Technology

SELECTION CONVENIENCE

Ready-to-eat: Breakfast, lunch, dinner, and snack options Amazon Go is a new kind of store with no checkout required. made fresh every day by our on-site chefs and favorite local We created the world’s most advanced shopping technology kitchens and bakeries. so you never have to wait in line.

Grocery Essentials: From staples like bread and milk to artisan With our Just Walk Out Shopping experience, simply use the cheeses and locally made chocolates. Amazon Go app to enter the store, take the products you want, and go! No lines, no checkout. (No, seriously.) Amazon Meal Kits: For a quick home-cooked dinner, pick up one of our chef-designed Amazon Meal Kits, with all the ingredients you need to make a meal for two in about 30 minutes. 19

AMAZON CONFIDENTIAL Why E-Commerce? Grocery e-commerce: If growth is a priority, a strategic e-commerce plan is essential

E-Commerce Will Drive 50% of CPG Sales Growth in the Next 3 Years1

Online Off-line $740 $718 $720

$700 36

$680 $666

$660 8 682 $640 658

$620 2013 2018E

▶ Industry forecasts call for online sales to contribute 5% to the sector by 2018; Aggressive estimates forecast 10% in certain categories and locations

▶ More than 50% of the $52B growth in total CPG between 2013 and 2018 will be online

(1) BCG, “The Winner-Take-All Digital World for CPG”, March 2016.

Amazon confidential 21 Evolution of Consumer Shopping Behavior

BRICK & MORTAR COMPUTER MOBILE VOICE CONNECTED HOME

• Dedicated time and resources to • Shop in one location • 60%+ of Amazon shopping is • AmazonFresh launched voice • Automated ordering

shop every week • Computer and internet mobile ordering in 2014 whenever you run out • Multiple stops to complete connection required • Order wherever you are • Touchless ordering • Entire process is run behind

shopping trip • Choose convenient delivery • Plan your grocery shopping at • Order what you need as you the scenes times work or on the go need it • Complete convenience

Time Intensive Convenient Resource Intensive Automated Location Dependent Seamless

Amazon Confidential 22 Voice Shopping on Fresh

Amazon Confidential 23 Grocery E-Commerce: What It Takes to Win

Complex path-to-purchase New Skills and Digital New Capabilities Greater customer are Required Buying distraction Behavior is Deep customer loyalty Different Focus on personalization ✓ Supply chain flexibility ✓ Digital media / traffic drivers ✓ Customer-driven Endless selection but highly “eaches” packaging constrained shelf space ✓ Online content The Traffic and sales drive management Virtual Shelf discoverability ✓ Search engine is Different optimization No front-of-store experience ✓ Personalization Variety-seeking is difficult ✓ Impulse

7/7/2017 AMAZON CONFIDENTIAL 24 Working with Amazon Vendor vs. Seller vs. Advertiser: 3 ways to work with Amazon

Type Vendor Seller Advertiser

Examples

Company Type Medium to Large Brand Retailer, Specialty food Medium to Large Brand shop or direct to consumer brand

Model Amazon purchases product Seller owns the inventory Brand purchases advertising on wholesale and sells it to and either ships it directly Amazon. This is typically most consumers. Amazon sets to consumer or uses our successful when your products the price and takes the fulfillment program. Seller are sold on Amazon, however, inventory risk. sets the price and owns the through AAP, you can also buy inventory risk. digital ads on other sites and direct traffic to your own website.

Relevant Amazon Amazon Grocery, Prime Amazon Grocery, Amazon Grocery, Formats Pantry, AmazonFresh, AmazonFresh (local), AmazonFresh, PrimeNow, AmazonGo PrimeNow (local retailer) PrimeNow

Amazon Confidential 26 Becoming an Amazon Vendor

Which format is right for your brand?

• Ambient products only, nothing that requires refrigeration • National distribution • Typically higher average selling price items (>$5) or multi-packs

• Ambient products only, nothing that requires refrigeration • National distribution • Everyday sizes - individual, low average selling priced items

• Full grocery offering, including produce, perishables and frozen • Regional distribution • Everyday sizes - individual, low average selling priced items

• Limited grocery offering, including produce and perishables • Regional distribution • Everyday sizes - individual, low average selling priced items • Typically best-sellers from other Amazon formats

Amazon Confidential 27 Brand Owners: How to Build a Successful Business on Amazon.com & AmazonFresh

▶ Work directly with Amazon to get set up as a Vendor or set yourself up as a Seller

▶ Ambient products can work with Amazon.com or AmazonFresh

▶ Chilled/Frozen should work with AmazonFresh

▶ Ensure your product listings are accurate and complete

▶ Titles, Images – photography matters

▶ Product Descriptions

▶ Attributes (Organic, Non-GMO, Vegan, etc…)

▶ Market your products to Amazon Customers

▶ Participate in seasonal or category merchandising

▶ AMS: Automated Merchandising Services

▶ AMG: Amazon Media Group

Amazon Confidential 28 Selling on Amazon: 2 options for Consumables

There are 2 main programs for consumables sellers:

• National sales • Two fulfillment options: merchant-fulfilled and Fulfilled by Amazon (FBA). Merchant fulfilled: you ship directly to customers, Fulfilled by Amazon: you ship to our warehouse, we ship to customers • Amazon receives a commission off each sale and collects fulfillment fees for FBA. • Promote your products with Sponsored Products • Invitation only

Learn more and apply at: https://services.amazon.com/

• Regional sales (e.g., Sell through AmazonFresh in Boston) • We send you daily orders that you can drop off at our FC or a designated merchant access point • You set your own prices and inventory levels • Amazon receives a commission off each sale • Invitation only

Learn more and apply at: https://services.amazon.com/local-market-by-amazonfresh.htm

Amazon Confidential 29 Selling on Amazon: Rules for Consumable Products

Seller requirements • You must be registered as a seller on the Professional Selling plan. • You must meet the following seller performance targets: Order defect rate: < 1% • Pre-fulfillment cancel rate: < 2.5% • Late shipment rate: < 4% • You must provide us with acceptable documentation (such as product invoices) and other information we request about the products you intend to sell. After you request approval to sell in the Grocery & Gourmet Food category, we will contact you with additional information. • You are not required to have your own company website, but if you have one it will be helpful to us to review it during the application process.

All Sellers Must Apply: https://s3.amazonaws.com/merchant-facing/StyleGuides/GroceryStyleGuide.pdf

Amazon Confidential 30 Selling on Amazon: Rules for Consumable Products

Product requirements • Food must be properly prepared, sealed, packaged (fully enclosed), and labeled. • You must be properly licensed, permitted, registered, or otherwise approved by the applicable government agency for the products you intend to sell. • You must also understand you are responsible for ensuring your products and business operations comply with all applicable federal and state laws, even if not specifically described in our policies. • All Grocery & Gourmet Food products must be sold in New condition. Used listings are not permitted. For more information, see Condition guidelines. • Food is considered date-sensitive, so it must have an expiration date that is indelibly marked on every shippable/sellable unit and each individual/retail display unit, unless otherwise exempted. • All Grocery products must include product labeling in English that complies with applicable federal, state and local laws. Federal labeling requirements are available here: FDA Food Labeling and Nutrition, FDA Pet Food, and USDA Labeling/Label Approval. • Food must be fully enclosed and sealed in packaging suitable for shipping. Shipping must ensure food quality and safety (for example, avoids contamination, spoilage, melting, and damage). • Food must ship to the customer with an acceptable portion of its shelf life remaining; the expiration date cannot be removed or tampered with. • All Grocery & Gourmet Food products must be listed using the manufacturer's UPC code. For more information on UPC requirements, see Product UPCs and GTINs. If you do not have UPCs, review Amazon Brand Registry information for how to list products without UPCs.

Use the Style Guide! https://s3.amazonaws.com/merchant-facing/StyleGuides/GroceryStyleGuide.pdf

Amazon Confidential 31 Fulfillment by Amazon: Rules for Consumable Products

Examples of permitted listings Properly prepared and sealed foods and beverages that are appropriately packaged and labeled. Products need to be shipped appropriately to protect the quality and safety of the food, to avoid spoilage, melting, damage, and so on.

All food packaging must include the following: • Product name • Name and address of the packaging company • Expiration date • Net content quantity and weight (the weight of the contents, not including any packaging)

Lot-controlled products with a shelf-life of greater than 90 days. Perishable products must be removed from inventory 50 days before the expiration date. For Amazon-fulfilled orders (FBA), units within 50 days of expiration will be removed for disposal and will not be available for return.

Amazon Confidential 32 Brand Registry: Who Should Register Their Brand

Why enroll your brand in the Amazon Brand Registry? Amazon Brand Registry helps you protect your registered trademarks on Amazon and create an accurate and trusted experience for customers. Your enrollment in the Amazon Brand Registry provides access to powerful tools including proprietary text and image search, predictive automation based on your reports of suspected intellectual property rights violations, and increased authority over product listings with your brand name. Learn more at: https://services.amazon.com/brand-registry.html

Frequently Asked Questions:

What type of brands are eligible for the Amazon Brand Registry? Currently, brands must have a registered trademark to be eligible to join the Brand Registry. The trademark must be a “standard character mark” and the trademark must match the brand name printed on products and/or packaging. Updates to the Brand Registry eligibility criteria will be posted to this page.

What information is required to enroll a brand in Amazon Brand Registry? Currently, to enroll a brand in Brand Registry, you must provide the following information: • Brand name that has a registered trademark. • Government Registered Principal Trademark Registration or Serial Number • For USPTO marks, the Mark Drawing Type must be equal to “4 - STANDARD CHARACTER MARK” or “1 - TYPESET WORD(S)/LETTER(S)/NUMBER(S)” • Images of the brand’s logo. • Images of products and packaging that carry the trademarked brand name. If the product is not branded, the packaging must be branded. • A list of product categories (e.g., apparel, sporting goods, electronics) in which the brand should be listed. • A list of countries where the brand’s products are manufactured and distributed.

Amazon Confidential 33 Amazon Media Group Offers Many Formats for Advertisers

Amazon Confidential 34 Thank you Vermont Specialty Foods Association!

April Lane Category Leader, AmazonFresh [email protected]

Amazon Confidential 35 7/7/2017