On the face of it, it’s a head-scratching offer.
Six squeezy bottles of no-name ketchup for an eye-watering £10.34, more than three times the price you’d have to pay for six bottles of own-label ketchup in Tesco, where a 550g bottle costs just 65p.
Own-label mayonnaise, yellow mustard and BBQ sauce under the same Solimo own-brand are sold at similar price points.
So why is Amazon selling own-label table sauces at such a seemingly uncompetitive price? What kinds of shopper is this aimed at? And what does all this tell us about its wider grocery strategy?
We asked Ray Gaul, senior vice president of research and analytics at Kantar Consulting, to explain.
“Let me start by saying that Amazon doesn’t seem to have got its prices right at the moment - and most of the comments online reflect this. It will correct that quickly.
Now, let me explain why this Amazon ketchup should not be compared to Tesco or Asda ketchup.
First, this product is part of the Amazon Vine Programme. Think of this as Amazon’s R&D platform, where it invites consumers to provide feedback.
The difference between Amazon and normal supermarkets? Amazon is a digital retailer, so it makes all of the products available on the digital platform where you and I can see it, as well as all the Vine members.
Second, the pack size is what we call a trade pack (6x500ml) – designed for small bulk purchases and frequent re-orders. This pack size is designed for the HoReCa trade (hotels, restaurants, cafés).
“If you run a bed and breakfast and replenish with Amazon Prime you get free shipping. That’s impossible if you buy from Booker or Costco”
If you run a bed and breakfast and you replenish with Amazon Prime, you get free shipping. That’s impossible if you buy from Booker or Costco. Plus, you get a new flavour, and you also probably already order from Amazon.
The alternative to Heinz from the HoReCa trade is either Kirkland Signature from Costco or Chef’s Essentials from Booker. These are the prices you need to compare, but remember you need to do the trade price plus shipping costs/delivery to get the comparison.
Just to compare, the price for a similar Heinz item on Tesco.com is £2.50 per unit or £15, plus shipping for a pack of six. The same Heinz item on Amazon Pantry is £2 per unit.
Third, since this is still a Vine item, Amazon is not going to launch it to the public algorithm yet.
If and when it goes public, the price will be hit by the algorithm and then the per unit pricing will be very sharp and probably about 5% cheaper than most other websites.
Right now Amazon is gathering feedback on how its own-label product compares with Heinz, which is the item it wants the Vine members to compare against. So, far the members are saying that they would not switch from Heinz at the current price on Amazon.
Finally, Amazon may never decide to sell this item if it cannot disrupt the brand leader, ie Heinz.
Remember, Amazon is trying to be as disruptive as possible in categories and simply creating a ketchup that is better than a supermarket own label is not going to disrupt much of anything.”
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