Amazon Powers into Online FMCG Brands

18 April 2006

Nearly 2,000 basic packaged foods lines are now available online to US consumers via These include twelve-packs of Campbell's Cream of Mushroom soup for $12.99, and multipacks of seventy individual servings of Kellogg's Corn Flakes for $28.

The move reflects Amazon's ambition to become a cyber Wal-Mart, the dominant online one-stop shop. According to spokeswoman Tracy Ogden, the web titan has been eyeing incursions by non-food outlets such as drug store chains into food retailing Says Ogden: "We look on [Amazon] as a drug store … and you are going to find food items in a drug store."

The e-tailer has gradually expanded the 'food and snacks' section of its online 'health and personal care store' in recent months, focusing on bulk purchases of non-perishable items delivered free by parcel service.

Amazon's food selection concentrates on upscale, higher-margin brands in line with the demographics of typical users, offering for instance, organic products from Wild Oats, the second largest US organic and natural grocery chain, and similar provender from Paul Newman's Natural Organics.

A downside to the service, however, is its lengthy lead times, with items like soup taking up to five weeks to deliver - a factor made acceptable to many only by the cut-throat prices on offer. Campbell's Beef and Rice chunky soup, for example, sells for $1.57 a can versus $2.69 per can on Peapod, the largest US online grocer.

Data sourced from Financial Times Online; additional content by WARC staff