Amazon to Vendors: Skip Stores, Sell Direct

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As though brick-and-mortar hasn’t had it bad enough of late, Amazon is actively campaigning to convince consumer products companies to shift their focus from big boxes to consumers.

And to move in that direction, they’ll need to shift from packaging designed to jump off store shelves to durable containers that can better weather the trip from warehouses to consumers’ houses.

Amazon has invited leading CPG companies like Mondelez and General to a three-day meeting during which they’ll discuss specific concerns related to fulfillment and have the opportunity to visit one of Amazon’s distribution facilities, according to Bloomberg. Representatives from Nike as well as groups with ties to Uniliver, Kimberly-Clark and Land O’ Lakes are expected to be in attendance.

“Times are changing,” Amazon said in an invitation obtained by Bloomberg. “Amazon strongly believes that supply chains designed to serve the direct-to-consumer business have the power to bring improved customer experiences and global efficiency. To achieve this requires a major shift in thinking.”

Though for many of these companies, e-commerce represents a small fraction of overall sales, Amazon, of course, sees online as the future. And as the company continues to expand with services like Amazon Prime Now, which offers unlimited two-hour deliveries, consumers may increasingly find that more attractive than a trip to the store.

And while it might be hard to imagine Chips Ahoy and Wheat Thins in anything other than their cheerful packaging, Amazon just may be able to convince sellers to trade them in. Already, electronics and toy manufacturers offer easy-to-open, “frustration-free” packaging at the behest of the e-commerce giant.

CPG companies may find the request hard to turn down. Consider what’s become of the battery market. Amazon wanted that business and now, through AmazonBasics, it represents 31 percent of online battery sales, according to AdAge. The message: you supply it or we will.

To assist in their last-mile deployment, Amazon already offers brands a range of fulfillment services. And the company continues to invest in logistics. The online marketplace just announced it will expand its fulfillment centers with a Katy, Texas, location. The operation will employ 1,000 full-time workers, who will pick, pack and ship larger-sized items.

Even as it encourages brand partners to think online first, Amazon continues to tinker with physical store concepts. Earlier this month, it opened grocery store pick-up locations in Seattle, and it has designs on additional bookstore locations. The New York Times reports the company is considering opening showrooms for furniture and appliances to drive big purchases online.


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