What is Amazon Fresh and How Does it Work?
Over the years, we’ve seen a change in perspective when it comes to consumer trends. People have mixed emotions about visiting a physical grocery store, paying at the counter, and loading and unloading their shopping bags in the car. Grocery delivery services have made getting food, produce, and other grocery items easier.
Introducing Amazon Fresh—the retail giant’s grocery delivery service. Recent statistics show that the Fresh program has a 78% brand awareness and an impressive 81% customer loyalty in the United States. 32% of online grocery delivery service consumers use Fresh, and 26% of the respondents say they will likely use it again. As a seller, you can expand into grocery products and take advantage of this program to increase profits.
But how does Amazon Fresh work? Keep reading if you’re interested in selling food on Amazon via online delivery services.
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What Is Amazon Fresh?
Amazon Fresh allows consumers to buy food and other grocery items online on the retail brand’s website. The company then delivers them directly to the customer's doorstep. There are more than 500,000 items that they can deliver straight to your home. These include fresh organic products, fruits, vegetables, dairy, fresh fish and meats, refreshments and liquor, skincare and beauty care products, and newborn and child care items — and that's only the beginning.
Amazon Fresh is accessible in major cities across the United States and other countries. You can check if it’s available in your area by entering your zip code on the website. Some of its competitors include Walmart Grocery, Google Shopping, Peapod, Instacart, Thrive Market, and Costco.
Benefits of Amazon Fresh for the Buyer
Amazon Fresh is extremely popular and well-received because it helps consumers schedule and receives their groceries, even when they’re tied for time. In addition to the convenience of online grocery shopping, Fresh stores feature Alexa kiosks that make it easier to search and find grocery items — no need to wander aimlessly down supermarket aisles anymore. You’ll know where they are right away.
Alexa also serves as a smart shopping list, so consumers don’t have to write down everything they need on paper or a note on their phones. You can simply tell Alexa to add something to your grocery list, automatically adding said item to the list. This means filling up a grocery cart is faster and more convenient than ever.
Of course, Amazon Fresh also means skipping long queues and driving to and from the grocery store. Consumers get everything they need — from fresh fruits and vegetables to meat and dairy products to other items — delivered right away for a minimal or no delivery fee.
How Does Fresh Work For Buyers?
Buyers require an Amazon Prime membership to access the monthly program. They need to pay a fixed monthly membership fee to the retailer to access Fresh and other benefits. Once that’s done, members can access Fresh on the Amazon website or mobile app. Alternatively, they can use Alexa to help them search for the needed items.
Amazon Fresh is fairly straightforward — it is designed for convenience. Buyers must search for their desired grocery items, browse their options, add the products to their cart, and purchase whatever is inside their shopping cart.
Once the buyer has placed their order, they need to schedule their preferred 2-hour delivery window. During this time, trained delivery staff pick up the items and drop them off directly at the buyer’s doorstep.
Delivery Options for Amazon Fresh
Deliveries can be made on the same day or the next, depending on what time the buyer placed their order. There are two delivery options that buyers can choose from — attended and unattended. Attended deliveries generally require someone to be present at the drop-off location to receive the Amazon Fresh order, which should be delivered in regular plastic bags. Meanwhile, unattended deliveries use temperature-controlled bags to regulate food temperatures and ensure that the items remain fresh even though nobody is at the drop-off location to receive the order.
How Much Does Amazon Fresh Cost the Buyer?
Amazon Fresh itself doesn’t cost anything for the buyer. However, even though it doesn’t have an individual cost, consumers must still have a Prime membership before using the online grocery delivery service.
The current membership pricing of Prime costs $14.99 a month or $139 a year. Students can get a discount with the Prime Student membership, which is $7.49 monthly or $69 annually.
All orders on Amazon Fresh are entitled to free delivery as long as the total order value exceeds $35. Orders below $35 have a shipping charge of $4.99 — buyers might need to shell out up to $9.99 to expedite the delivery service.
Difference Between Amazon Fresh and Amazon Pantry
Amazon Fresh is frequently mistaken for Amazon Pantry because of the closeness of items advertised within each brand. Despite the similarities in how Prime Pantry works and Fresh operates, they aren’t entirely the same.
As the name implies, Amazon Fresh primarily sells fresh organic products, crisp vegetables, dairy items, and meat. Meanwhile, Pantry only sells non-perishable items. The main difference between Amazon Pantry vs. Fresh lies in what each service offers and delivers.
It’s worth noting that in India, the company has decided to combine and integrate Fresh and Pantry into one platform — Amazon Fresh. They made this decision to streamline how they cater to their customers. Having both perishables and non-perishables on one platform makes the fulfillment process more efficient, resulting in timely delivery and better customer service.
Can Third-party Sellers Join Amazon Fresh?
Selling food on Amazon involves storing perishable products in a warehouse, where they are prepared, packed, and shipped to Fresh customers. To ensure that grocery items remain in excellent condition until they are delivered to the buyer, they are stored at a warehouse close to all nearby hubs. This way, grocery items can be delivered promptly within 24 hours of receiving them. The strategic location also makes for easy pickup and delivery logistics.
Now that we’ve explained how food is sold on Amazon, the question is, “Can you sell food on Amazon, or is it limited to specific stores and sellers?” Long story short, sellers can pursue a business venture on Fresh, but only if they get permission. Given this solid system that it has established, the platform is careful with the sellers they allow.
Note: The general Amazon marketplace has stopped third-party sellers on the platform since 2018. However, the platform still accepts some third-party sellers on an invite-only basis, meaning they aren’t open for applications.
How Can Sellers Get Permission to Sell Food on Amazon?
Both new and experienced sellers experience restrictions in the platform's Grocery & Gourmet Food category — and permission to sell food in this category is necessary to sell grocery items through Fresh. You might get auto-approved to sell in the grocery category if you have an existing account with a strong selling history. Otherwise, you must prepare documentation to prove you are qualified to sell groceries via Amazon Fresh. The application process may seem tedious or intimidating, but this is Amazon’s way of ensuring that you sell safe and authentic products to consumers. Your application should include
- Proof you’re a legitimate wholesaler, distributor, or manufacturer.
- If you are not the manufacturer, you must include one purchase invoice from a distributor or manufacturer of the products you want to sell.
- Photos of the physical product you plan to sell.
Once you get the verification, you can start researching products and looking up wholesale grocery distributors. Product Research for Amazon tool is a great way to find new grocery ideas or gaps in the market. Choose your new supplier wisely — ensure Amazon accepts their grocery product invoices.
It’s important to note that grocery seller permissions can be revoked if you don’t:
- Maintain <1% order defect rate
- Maintain < 2.5% pre-fulfillment cancel rate
- Maintain <4% late shipment rate
This means you must ensure your grocery products have no defects, you hit at least 98% order fulfillment, and your shipments should always be delivered on time(for FBM).
Shipping Requirements for Grocery and Gourmet Food Sellers
Amazon food items are time-sensitive. This means each product unit must be marked with an expiration date. Here are more shipping requirements to consider:
- Ensure the food is appropriately sealed to prevent contamination and damage
- Ensure the product packaging is suitable for shipment and delivery
- Ship food products with a reasonable shelf life remaining
Additionally, you cannot alter or remove the shelf life or expiration date of grocery products for shipping. So make sure each unit you check into an Amazon fulfillment center has sufficient time for consumption, then an additional 90 days on top of that.
For example, selling a bottle of food supplements with 30 daily servings must have a 30-day shelf life plus 90 extra days. That’s a total of 120 days minimum in the fulfillment center. Products that aren’t sold within their shelf-life period will be marked unsellable and removed from your inventory by Amazon.
Product Requirements for Selling Groceries on Amazon
Here are the first two things you must remember when selling groceries through Amazon Fresh:
- The food must be prepared, packaged, sealed, and labeled in compliance with state and federal laws.
- You must have all approvals or licenses from any involved or relevant government agency to sell the product.
Other product listing requirements include
- Labeling all products in English
- Listing all grocery and gourmet products as new products
- Indicating the expiration date clearly on both the product and the listing
You must also update the Fulfillment Center Shelflife for every grocery product you sell. Shelflife is a Seller Central setting that ensures Amazon discards expired products instead of shipping them to customers. A high-quality Yogurt smoothie listing is shown below.
Is the Grocery and Gourmet Food Category Profitable?
Before anything else, it’s worth mentioning that Amazon Fresh would be a direct competitor in the grocery and gourmet food category. However, sellers can still make decent profits by managing inventory carefully and setting the right prices.
Generally speaking, you can gain noticeable profit from selling groceries and gourmet food items because consumers are bound to buy them and, if they like them, replenish their pantry with the said product. You simply have to be careful with your inventory — ensure you have enough but not too much that they go to waste.
Of course, because some stores might offer the same products for a cheaper price or with a greater discount, you must advertise products properly to gain maximum profit.
How Can You Sell More Groceries on Amazon?
The American online grocery industry is on the way to becoming a $250-billion industry by 2025. And as more sellers decide to put their products on Amazon, you have to learn how to advertise your products in a way that makes your brand stand out. Here are four tips to help you sell more grocery products:
- Use discount messaging on your grocery ads. Encourage consumers to subscribe to save a specific amount in discounts and promos
- Add lifestyle images to your grocery ads, showing the products in real-life environments so that you can gain the interest and trust of consumers
- Create supermarket ads that feature shoppers and their lifestyles. This level of engagement is bound to raise the purchase rate by at least 18%.
The below image shows a lifestyle photo of Lunchable Cheddar Crackers
With these tips, you’re on the way to reaching higher profitability on Amazon.
Amazon Fresh isn’t unique in being a grocery pickup and delivery service provider — many platforms offer the same service. However, it stands out because of its convenience and innovative technology. It even integrated Amazon’s Alexa voice technology, which makes grocery shopping easier and more convenient than ever.
More people are seeing the significance of Amazon Fresh in everyday life. So, it’s wise to pay attention to the service, find out how to get approved to sell food on Amazon and explore the benefits of applying for it.
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Amazon Fresh has created new opportunities for sellers, but it is not the only one. Amazon Subscribe and Save for FBA Sellers is another great program to earn more profits and expand your business.