Amazon CPG & Grocery – 5 Huge Misconceptions

A reliable Amazon management service can make or break your success as an omnichannel CPG & Grocery brand. As online marketplaces continue to grow, more and more businesses are coming to Bobsled for expert advice. We are recognized by Business Insider as a top Amazon firm offering CPG & grocery marketing services, and some of our expert CPG advice has been featured on the Amazon Advertising blog. In addition, Bobsled recently made the Inc. 5000 list as a booming CPG & grocery marketing firm.

It’s no secret that the grocery and CPG market is one of the fastest-growing categories on Amazon, encouraging a lot of businesses to prioritize the channel with more resourcing and marketing budget. But before you jump ship and dive headfirst into this rapidly expanding market, you should be aware of the growing misinformation as well. 

Bobsled’s Caroline Adams has shared the 5 most dangerous misconceptions about Amazon CPG & grocery below. Gain a clear understanding of these points of contention (and Bobsled’s best practices) so you can feel secure in your Amazon strategy!

Misconception #1 - Amazon is the only worthwhile
CPG & Grocery platform

Amazon is a gigantic force in ecommerce with a Prime Membership base of over 150 million customers. But that does not mean it should be your exclusive platform for selling packaged goods and groceries. 

Any brand that is looking to expand its bottom line and increase sales through the CPG market should consider diversifying the platforms it sells on. Bobsled believes in a diverse, omnichannel approach to ecommerce selling and recommends a strategy that encompasses all of the powerhouse grocery platforms. In addition to Amazon, you should consider expanding your growth strategy to include Instacart, Walmart, and your own website to capitalize on every profitable opportunity possible. Reports show that more than half of all U.S. grocery delivery sales come through Instacart, and so beyond Amazon, Instacart should be next on the list for most brands.

On October 19th at 11 am EST, Bobsled Founder & CEO Kiri Masters will be hosting a very insightful webinar about 7 of the most important challenges ecommerce & digital leaders of omnichannel brands will face in the coming year.

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This omnichannel approach is generally better for the consumer as well. By expanding to multiple platforms you are meeting more customers exactly where they like to shop. Also, you’ll gain valuable insight into important consumer shopping behaviors that could benefit your advertising campaigns in the future. Bobsled uses a Share of Voice Analysis that appraises competing brands and platforms to gain crucial strategic insights.

However, we also believe that platform expansion should only happen when the time is right for your brand. The issue is that many brands are already on non-Amazon marketplaces because their products are being sold by unknown third parties. 

Once a CPG or Grocery brand takes ownership of each channel, they will be able to transform new insights and analytics into first-party data that will inform higher-up-the-funnel marketing strategies in the future.

💡Check out Bobsled’s Instacart Expansion Service

Misconception #2 - Once your product is on the platform it will sell like hotcakes

Too many Amazon brands use a painstaking trial and error process to figure out what products will sell right away, or what type of ad campaign will generate the most clicks (and sales). Instead of using intuition to decide if your CPG & grocery products will perform, you can devise a testing strategy that will provide incredibly useful predictive data. 

One of the most challenging aspects of SEO and ecommerce that Bobsled clients face is trying to discover the perfect pricing, content, and advertising strategies to ensure optimal success. Competition in the consumable market is incredibly fierce, so you can never be passive when aiming for success. We take a two-step approach to help you figure out which products will fly off the shelves and which ones may take more time to gain traction among consumers. 

1. We complete extensive keyword research to seed out the best titles, bullets, descriptions, and overall content that is driving conversions in the same category. Once all of that information has been gathered, it will be tested against content refresh trends.
2. A/B testing to test all of your different products and PDP titles. This is the best way to provide a clear, analytics-driven before and after look at your products. The goal is to test and simulate each product and use real market information to determine what will yield the most successful results.

Bobsled clients nearly always see a boost in conversions and sales after going through A/B testing. Post-testing results for one client yielded an 11% bump in conversions after data conclusively showed which PDP will perform the strongest.

💡 Check out Bobsled’s Channel Management Service

Misconception #3 - Shoppers will abandon ecommerce and
return to brick-and-mortar stores

The pandemic forced consumers to shift their priority towards products that are available in bulk, last longer, and provide higher value for a more affordable price. In other words; the CPG & grocery industry has never been more in demand. 

IPI metrics, storage capacity, storage fees, and industry pricing averages – everything has fluctuated aggressively over the past eighteen months. Most Amazon brands saw a huge surge in sales, up to 5x their typical monthly volume, because consumers stocked up their pantries at the beginning of the pandemic. Naturally, this resulted in those same brands running out of stock and replenishing their inventories at much higher rates. 

Before becoming a Bobsled client, one grocery brand had the equivalent of almost 9 months of inventory after replenishing their OOS items. But soon after their inventory reached Amazon’s FCs, demand for these items unexpectedly normalized to pre-pandemic levels, meaning nearly every SKU was dangerously overstocked. 

This grocery brand engaged Bobsled’s services and a listing optimization opportunity was identified. This included a complete rethinking of keywords, titles, bullets, descriptions, images, and PPC ad campaigns to achieve stability and maintain channel profitability. For this particular client, it resulted in a 568% total sales increase three months after Bobsled began working on the account. 

The reopening of brick-and-mortar stores has not caused major impact to ecommerce sales for Bobsled’s Grocery and CPG clients. This is because a lot of hard work has gone into winning and maintaining online shopper loyalty on Amazon and other major ecommerce platforms. We have found that the tumultuous waters caused by the pandemic is to get in front of it with aggressive marketing campaigns which includes promotional calendars, Amazon deals, PEDs, BOGOs, and influencer partnerships.

💡Check out Amazon For CPG Brands – A New Playbook For
The New Normal

Misconception #4 - Amazon incentives are being replaced by AI

Advanced AI technology contributes to the ecommerce landscape by offering easy access to buying and selling options for consumers. For example, Alexa and other similar voice-activated tools can help shoppers make repeat purchases and add specific items to a ‘favorites’ list. This is contributing to the myth that certain incentives, such as ‘Subscribe and Save’, are being completely replaced by advanced AI which at this time brands have no ability to manipulate. 

In reality, existing incentives are still being used by great effect by brands to increase sales on Amazon. However, you still need to find ways to get the right eyeballs to notice your offers. 

A great solution can be to increase brand and customer loyalty through partnering with ecommerce influencers. This is a data-driven strategy to overcome mass consumer mistrust, especially after widespread economic uncertainty due to the pandemic. Once you’ve done the hard work of finding the right influencer and setting up an appropriate promo strategy you’re set up to win countless new long-term customers.

💡Check out Working With Influencers For Amazon Live

Also, it’s really important to stay abreast of new and repeated trends in shopper behavior. More consumers than ever have been shopping for CPG items online, with 31% of shoppers making digital CPG purchases in the last year. Research has also shown that repeat intent – which measures a shopper’s intention to use the same methods and brands as the year before – has increased significantly. 

One Bobsled client experienced stagnation in their subscription-based model because of an OOS inventory position. Not only did this cause a dip in the stream of repeat purchases (and a subsequent hit to their Amazon ranking), but it resulted in an overall loss of sales. The strategy used to correct this trending problem was to increase the Subscribe and Save discount to incentivize more shoppers to sign up. With a recommended 10% discount across the board, the client started to experience steady growth and a YTD increase of over 100%.

💡Check out Bobsled’s Channel Management Service

Misconception #5 - Amazon PPC and Promotions are the only necessary growth strategies

While PPC ads and Amazon promos will always be part of your channel management strategy, they are not the only tools needed for meaningful and lasting growth. 

An omnichannel advertising approach is necessary for brands looking to expand ecommerce profits. This includes Google Ads, Amazon DSP, Instacart, and other non-Amazon PPC such as Facebook and Instagram. Widening your net will help increase your profits, engage with a more diverse array of consumers, and ultimately boost your sales. An omnichannel approach no doubt requires a bigger investment, but it leads to hefty returns. 

A new Bobsled client recently launched a new Amazon store with highly seasonal items and therefore a limited timeframe to gather sales. Right off the bat, a diversified advertising strategy was implemented. Both on and off-Amazon PPC vehicles were used to capture more qualified traffic. The biggest driving factor for new conversions was via Facebook advertising, which was then piggybacked on by an acquisition strategy on Amazon. 

As a result of this strategy, the brand saw 332% growth in total sales over 5 months and a corresponding 67.33% growth in Total Advertising Cost of Sales (TACoS). This sudden exponential success is more than possible when you employ the right marketing tactics and use the right platforms to introduce your brand to consumers. 

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Looking for more diverse ways to position your CPG & grocery brand through Amazon and beyond? Schedule a free consultation with Bobsled now to explore the best strategies with the highest profitability payoffs.