Amazon: Vendor Flex, Storefront Consolidation; In-Feed Video Ads

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One way for brands to achieve an additional level of supply chain flexibility with Amazon is through Vendor Flex, a program in which Amazon operates a portion of the vendor’s warehouse that is solely dedicated to Amazon orders. The program has been of particular interest over the last few months as brands are looking for new ways to streamline the supply chain and as Amazon seems to be pitching the program to more brands. The benefits of Vendor Flex include reduced shortages and chargebacks, transportation savings, eliminated freight allowance and delayed/missed Amazon pickups as well as additional flexibility and capacity among. Capacity utilization is the most important element to keep in mind when executing the program. Assortment, shifts, equipment, and space are the main reasons for brands to consider using Amazon’s VendorFlex to maximize capacity.   

Amazon Go Grocery Converts to Fresh:
Since we are almost halfwaythrough the year, branded manufacturers have tapered their expectations for Amazon Fresh’s physical store footprint for 2021. In Amazon’s first quarter earnings call it was mentioned that it was too early to comment on the performance of the stores, but additional locations were confirmed to be coming soon in Seattle, Southern California, New Jersey, and Chicago. Additionally, an Amazon Go grocery store (Amazon’s larger version of Amazon Go stores) will now be rebranded as an Amazon Fresh store, thus continuing the consolidation of Amazon’s overall grocery strategy.  

Sponsored In-Search Videos exceeding expectations:
Our benchmark data for every Console ad type for General Merchandise brands, revealed positive returns in 2020 and estimates increased ad spend in 2021. Sponsored Brand In-Search Videos were the strongest performers, exceeding expectations for a net 45% of General Merchandise brands and therefore garnering an increase in spend this year for a net 56% of brands. Given Sponsored Brand In-Search Videos are a relatively newer ad unit, the story behind these metrics is likely that brands were happy with the test-and-learns they did last year making them ready to invest more meaningfully for ad units this year. 

Source: Company Reports; CRC Estimates

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