Study: Amazon sees double-digit growth in consumables

BY Deena M. Amato-McCoy

Despite a decline in the overall health & personal care (HPC), baby and grocery categories industry-wide, Amazon is grabbing double-digit wallet share.

This was according to the “Health & Personal Care” report from One Click Retail. The company uses a combination of website indexing, machine learning and proprietary software to estimate weekly online sales of individual SKUs on Amazon. The total HPC and grocery markets experienced declines of 1% and 10%, respectively in the first quarter of 2017 due to more consumers shifting away from brick-and-mortar and toward e-commerce for consumables. That said, Amazon’s sales of consumables in the HPC, baby and grocery groups saw double-digit growth for the period.

The report revealed that Amazon is the best growth opportunity for HPC brands, given that total HPC sales in the United States increased only about 1% in Q1 2017. Amazon already earned $1.3 billion, or 27.5% of the total annual sales, in 2016.

The real “MVP” of Amazon's HPC product group continues to be Prime Pantry. With more shoppers buying into exclusive Amazon Pantry access, the growth rate for HPC (and most other product categories) is much higher in Pantry than in the general marketplace — and top categories are multiplying by hundreds of percentage points. The leading Amazon HPC category is hair care in the U.S. (85% growth), and household consumables (440% growth) in the U.K., the report revealed.

For the quarter, total U.S. baby products revenues dropped 10%. This slide mainly took place in offline sales, allowing e-commerce market share to rise from 20% to 22%.

The baby products category enjoyed the highest e-commerce CPG penetration, with Amazon having 43% of the total. First quarter Amazon U.S. sales of diapers increased 30%, baby food 15%, and baby formula 80%. In both the U.S. and the U.K., Amazon saw triple-digit growth of top brands like Pampers (700% increase), data revealed.

According to the report, there was a 30% growth rate in Amazon’s grocery categories averaged across the U.S., U.K. and Germany. This was driven by the growing adoption of Amazon Prime in first quarter 2017.

Traditionally, grocery has been less susceptible to the shift toward e-commerce (in 2016, only 5% of U.S. grocery sales occurred online). According to Amazon sales data calculations for first quarter 2017 however, Amazon's grocery sales outpaced that of the total market 15-fold.

"The popularity of perishables is growing rapidly, not only because consumers are becoming more comfortable with buying their groceries online, but also because Amazon is improving its delivery times and offering more fulfillment options," explains Spencer Millerberg, One Click Retail CEO.

He estimated that there are now more than 65 million Amazon Prime subscribers, “and they are more likely to buy their groceries online than non-subscribers. Last year's sharp rise in Prime membership has continued into Q1 2017,” Millerberg said.

“With more shoppers buying exclusive access to Amazon Pantry, the rate of growth for most consumables is much higher in Pantry than in the general marketplace, with top categories multiplying revenue by as much as five times,” he added. “As Amazon continues to corner the market, CPGs in the U.S., U.K. and Germany would be smart to engage with Amazon Prime members as their target audience."


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