Amazon AVNs, Private Label Packaging, Shipping Costs
Amazon AVNs a Mixed Story This Year
Our research suggests manufacturers have seen varied experiences with AVNs this year. Many are indicating Amazon’s asks have been unreasonably high, with the eTailer looking for increases to co-op, freight and damages. In addition, the company is also pitching merchandising programs that may or may not make sense for manufacturers, such as Treasure Truck participation and event merchandising programs. Vendors report having to be more discerning than ever in terms of evaluating potential programs as Amazon’s vendor managers appear to have steep profit goals this year. We have also heard many manufacturers indicate their annual vendor negotiations have not yet occurred. This has come up, for example, in the home improvement category with manufacturers suggesting the reduction in vendor managers for the category has left the eTailer with fewer resources to approach vendors. Most manufacturers that have not started AVN’s yet are not forcing the issue given their experience of tough AVN’s in years past.
Amazon focuses on sustainable packaging with Clean Revolution Private Label Brand
Amazon recently unveiled its new Clean Revolution private label of cleaning products, with a focus on sustainable packaging and eco-friendliness. The brand was developed with Replenish utilizing Replenish’s 3.0 system consisting of a reusable bottle and refill pods filled with product concentrate. This new private label represents an interesting shift to packaging innovation and eco-friendly design as differentiators for private label rather than a strict focus on price, as has been the case for most of Amazon’s prior private label offerings. It is also an important development for companies that have trouble economically shipping low-ASP, liquid-based products.
Amazon Shipping Costs Likely Accelerate with Introduction of 1-Day Shipping
Amazon’s shipping costs have trended higher over the last few years as the eTailer consistently ships more items and focuses on improving shipping times. This is likely to accelerate in the near term as Amazon rolls out 1-day shipping to Prime members, beginning with an $800M investment in 2Q19.
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