The ability to offer ultra-fast delivery from Amazon, as well as local stores and restaurants, is yet another benefit for those consumers willing to pony up the Prime membership fee. This hyper-localization of product and portfolio availability is an emerging opportunity for brands in the new retail experience.
Amazon Prime Now is growing rapidly, covering a range of categories from Health Care to Beverages. Just this month Makeup was introduced in the Chicago market and we expect Amazon to continue to add categories to increase the appeal of the service. However, Amazon’s rollout of categories and items in different markets has been irregular and has made it difficult for brands to track which items are stocked in different locations.
With the current distribution system, brands ship Prime Now items to a central warehouse before Amazon sends them to local markets, often times leaving brands in the dark. Our understanding of the current Prime Now model is that brands ship goods to an Amazon warehouse, and then Amazon ships them to local distribution centers. Since the service is still new, some brands worry that Amazon is not distributing items evenly across all available markets, and our data confirms that this is in fact the case.
Which US Locations Support Prime Now?
Prime Now is a rapidly expanding service with up-to-date details on available cities on the Amazon Prime Now website. At the time of this writing, the service is available in 28 cities across the United States including: Atlanta, Austin, Baltimore, Chicago, Cincinnati, Columbus, Dallas, Houston, Indianapolis, Las Vegas, Los Angeles, Manhattan and Brooklyn, Miami, Minneapolis and St. Paul, Nashville, Northern Virginia, Orlando, Phoenix, Portland, Raleigh, Richmond, Sacramento, San Antonio, San Diego, San Francisco Bay Area, Seattle and Eastside, Tampa, and Virginia Beach.
Available Categories on Prime Now
Prime Now offers 25,000+ items across 25 categories, including household items, groceries, electronics, gifts, and seasonal items. The service also offers food delivery from restaurants and local stores in select cities. This puts Prime Now in direct competition with food-specific services such as GrubHub and local delivery companies like PostMates. Prime Now also delivers alcohol from local liquor stores, a category which encroaches on Drizly’s turf.
Clavis Insight Prime Now Analysis
For this analysis, Clavis Insight looked at the Beer and Personal Care categories. In total, we reviewed over 50,000 items tracking price, seller, brands, reviews, and location. In this post we will focus on the Personal Care category.
Beauty & Personal Care: What the Data Says About Prime Now
Over 77% of the items in the category are being sold by Amazon itself, with the remainder coming directly from local merchants. This is skewed by some markets where Amazon is the only seller. In fact, 74% of the markets analyzed only had Amazon as the seller such as Atlanta, Austin, and Baltimore.
The top brands include Neutrogena, L'Oreal Paris, Burt's Bees, Pantene, Dove, Oral-B, Tom's of Maine, Aveeno, and Gillette along with others 1,700 other smaller competitors. The aforementioned top 9 brands account for only 21% of all items listed on the service in the Personal Care category, which shows Amazon’s efforts to diversify Prime Now. In fact, over 700 brands have only 1 or 2 items, highlighting the breadth of local offerings.
In the chart below we look at one of these leading brands. It has products available in every Prime Now market, but their portfolio varies widely depending on the location. Item counts range from eight in Dallas to 79 in Nashville. These gaps in product availability could lead to serious issues when tracking demand as it becomes difficult to determine if demand is soft due to lack of availability or other issues, such as price competition or low search ranking.
Other brands showed similar trends as the one shown above. For example, a second brand we investigated had product counts that fluctuated across markets, ranging from 20 items in one city to 80 in another.
When looking at all brands at the city level, items are more evenly distributed on Prime Now. Chicago stands out as the market with the most products at 12% of all Prime Now Beauty items, but most other cities have a comparable number of items with other cities averaging about 4% of available items.
Amazon Prime Now and the New Retail Experience
Amazon Prime Now creates a new exciting opportunity for brands. With two-hour delivery now in play, brands can expect increased consumer interest for items on-demand. However, in its current iteration the Prime Now service presents challenges. Items are not being evenly distributed across locations, something brands need to be aware of to make sure marquee items are available to all customers.
For now, brands need to manually track the geographic distribution of their products on Amazon Prime now. Once brands understand where their products are being sold, they can then target shoppers with location specific promotions. Given the speed of delivery (within one to two hours) we may even see brands entice shoppers into impulse purchases with hyper-targeted promotions.
Finally, Prime Now escalates consumer expectations and calls on brands to satisfy shoppers’ desire for instant gratification with unprecedented delivery times. Just like many consumers have been groomed to expect two-day shipping, two-hour shipping may soon become table stakes. If brands are out-of-stock on Amazon Prime Now, it opens itself up to competition from a rival brand. The expectation of instant gratification could be a threat to brand loyalty. Tracking Amazon Prime items to individual postal codes will be vital to maintaining relevance with shoppers on Prime Now.
