Investing in the Future of Food: ‘Winning first on Amazon can be the domino that sways every other channel’

By Elizabeth Crawford

- Last updated on GMT

Related tags Investing in the Future of Food Amazon ecommerce

With eMarketer analysts estimating that at least 50% of all US households will be Amazon Prime members by the end of the year and 56.9% will be by the end of 2021, there no denying the website’s sales potential – but according to one online marketing expert the website’s real draw for food and beverage CPGs is its marketing influence both online and off.

“The vast majority of purchases – 55% -- are digitally influenced, meaning either people are buying them online or they are influenced by patterns of what they see online in ratings and reviews,”​ John Denny, VP of eCommerce & digital marketing at the investment Cavu Ventures, told FoodNavigator-USA at the Digital Food & Beverage conference in Austin, Texas​.

He explained that most consumers are more likely to trust other consumers about the quality of a product or their experience, and as such they not only read the reviews, but they also ask each other questions online before buying a product.

“You have an amazing effect,”​ and the best way to harness that potential is by having products on Amazon, which is “the number one product search engine,”​ he explained.

He added that many “insurgent brands”​ understand this and are placing their products on Amazon to ensure that when consumers look for it – or a similar product – they can find it and learn more. Larger established companies, however, are struggling to grasp this trend, he added.

‘An advertising machine’

On top of this, Denny says, Amazon is an advertising machine that can help boost sales across channels – something CPG brands need to remember when measuring their return on investment.

“Amazon knows … what my wife is buying, what my kids re buying, what my neighbors are buying. They know pretty much what you are going to buy before you do,”​ and as such can target ads for products to meet that demand, Denny said.

Again, he noted, many new companies are taking advantage of this but larger companies are not because they don’t fully understand that an investment in Amazon advertising is an investment in cross-channel marketing.

“A lot of large food and beverage organizations look at Amazon as a ‘channel’ and ‘I am going to invest money in Amazon advertising as a search or DSP, and I need to see that return immediately in Amazon sales,’”​ he said. However, he clarified, that isn’t how advertising on Amazon works.

“The challenge is that we live in an omnichannel world,”​ but “large food and beverage companies are thinking channel, where they need to be thinking omnichannel. And what insurgent brands are leveraging is … they know that winning first on Amazon can be the domino that sways every other channel.”

If you are curious how to maximize the marketing power of Amazon, come back next Wednesday for our next episode of FoodNavigator-USA’s Investing in the Future of Food ​when Denny will share strategies for leveraging all that Amazon has to offer in terms of advertising.

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