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Marketing Review Vendor Name Date 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
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