✍ This article was written by Bobsled Marketing Manager Tom Crosthwaite
with contributions from Bobsled Advertising Director Stefan Jordev.
According to research from Business Insider, the market value of online grocery doubled between 2016 and 2018 and more staggering growth is predicted for the next few years. This presents an amazing opportunity for brands in this space.
“Winning on Amazon, the largest ecommerce marketplace, will become an absolute necessity for Grocery & Gourmet brands,” says Stefan Jordev, Advertising Director at Bobsled. “However, selling within this category on Amazon also comes with a lot of obstacles, which makes scaling through advertising difficult.”
Above: Online Grocery Market Forecast screenshot from Business Insider
In this article, we’re going to outline how Grocery & Gourmet food brands should be structuring their Amazon Advertising (PPC) efforts in order to grow market share on Amazon.
We’ll also share an Amazon Advertising case study from Bobsled client Barcel USA, a snack food manufacturer.
On the left: Bobsled Advertising Director Stefan Jordev
Part 1: Operational Preconditions
Before any PPC campaigns are launched, there are certain preconditions that need to be met.
- Firstly, you will need to get approval to sell in the Grocery & Gourmet category. This involves providing Amazon with all the required documentation (e.g. manufacturing invoices) for the products you intend to sell. For detailed information about required documentation, packaging requirements and the approval process, you can download the Bobsled Food & Beverage White Paper.
- Next, you will want to ensure that your product listings are optimized for the Amazon marketplace. You should include all the nutritional info and high-quality, zoomable product photos. Optimizing product pages will help with PPC conversion rates.
- Amazon has defined seller performance targets for brands in the Grocery & Gourmet category. You must maintain an order defect rate of less than 1%, a pre-fulfillment cancel rate of less than < 2.5%, and a late shipment rate of less than < 4%. Failure to maintain the above metrics may hinder your ability to control the Buy Box on your product listings.
- Finally, you should manage inventory levels well, accounting for expiry/shelf life limitations. If you suddenly run out of stock, this will hurt both your organic and paid customer acquisition efforts.
Brass tacks; it’s not possible to jump into the Grocery & Gourmet category overnight. Taking the time to meet all of the above preconditions will ensure that your brand is set up for long-term success on the Amazon channel.
To get a full picture of all the operational groundwork required, take a read of our past blog post The Full Guide To Selling Grocery & Gourmet Foods On Amazon.
Note: this post is from late 2016, so some of the information included is no longer relevant, but the guide still offers a fantastic overview of what it takes for brands to get set up within the category.
Above: Key Facts About the Online Grocery Market screenshot from Business Insider
Part 2: Successful Grocery & Gourmet Advertising (PPC) Campaigns
So you’re all set up from an operational perspective – now the PPC fun begins! Here are the next things to look at.
- The Amazon Advertising team encourages brands to make sure their products are “retail ready” before PPC advertising commences. Factors include owning the Buy Box and establishing some basic social proof by amassing at least 15 product reviews and a star rating of 3.5 or higher. Stefan Jordev has put together a helpful screen-share video (see below) where he outlines all the elements that contribute to retail readiness.
- Conduct comprehensive keyword research. Investing time to find the right search terms relating to your product line before you launch any campaigns will prevent you from wasting valuable funds on ineffective PPC campaigns.
- Develop a Storefront and drive Sponsored Brands traffic to it. A storefront can help tell your brand story and make your products stand out from the competition. To learn more, read our guide How To Use An Amazon Storefront To Make Your Brand More Money.
- Plan out your PPC maintenance schedule. At Bobsled, we do daily account check-ups where we ensure nothing out of the ordinary is happening within the advertising campaigns. Once a week we complete a more thorough deep dive and look for ways to optimize PPC performance e.g. analyzing the placement report and adjusting placements as required. Pro tip: make sure you complete your account maintenance at the same time every week so you can compare week-on-week performance with accuracy. In a recent Bobsled blog post, Bobsled PPC Manager Ross Walker explained how to align Amazon PPC spend ROI with overall brand goals.
- Experiment with Product & Category Targeting Sponsored Product campaigns. Standard Amazon PPC campaigns focus on search terms e.g. “chocolate bar”. But product & category targeting is slightly different. Product targeting gives brands the opportunity to own real estate on an actual product listing – it can be used to defend your listings from competitors or you can attack other brands’ listings. Likewise, category targeting gives brands the opportunity to win positioning for when customers are searching through a specific category e.g. “Candy & Chocolate Bars”. Both targeting options are particularly useful for “underdog” brands who are trying to gain a foothold in categories dominated by household names. For more insight read our Product & Category Targeting Guide.
- Keep a close eye on your Placement Reports which can be found in “Advertising Reports” under the Reports tab in Seller Central. Review the placement report periodically to see which placement performs the best for your account.
Above: To find placement data click on Reports > Advertising Reports, and then hit “Placement” under Report Type.
Part 3: Beyond PPC
Perhaps you already have an established Grocery & Gourmet account complete with thriving PPC campaigns. Nice work! Here are some additional levers you should be considering.
- Amazon Fresh and Amazon Pantry are Amazon’s grocery delivery and pick-up services, and brands can benefit from the customer loyalty that both programs facilitate. Brands selling perishable products that shoppers consume on a regular basis should consider joining Amazon Fresh, and brands selling non-perishable items should look at Amazon Pantry. At this time both programs are only available for vendors. Fortunately, the Bobsled team has some direct contacts with the Amazon Grocery team, so if you’re interested in learning more about how we work directly with Amazon on behalf of our clients please get in touch.
- Subscribe & Save is a feature that allows brands to offer product discounts in exchange for ongoing future purchases from Prime members. And it’s an amazing way to increase Customer Lifetime Value as it makes restocking super simple! Typically, Subscribe & Save works better for sealed items with a longer shelf life, like dry or canned goods, coffee and tea, etc.
Bobsled Grocery & Gourmet Case Study – Barcel USA
Bobsled has been working with Barcel USA, a manufacturer of a wide-range of popular salty snacks, sweets, and nuts since March 2019.
The Bobsled team was responsible for the launch of the new Panditas by Ricolino product line, as well as the overall optimization of Barcel USA’s Amazon presence.
Above: Panditas by Ricolino classic gummy bears.
Bobsled’s work to improve Barcel’s Amazon presence through retail readiness optimizations and a diverse Amazon Advertising strategy yielded strong results against the client goals.
As of October 2019, Barcel’s Mink Takis (Fuego flavor) rank within the top 10 Amazon Best Sellers for “Corn Chips & Crisps.” The Amazon Advertising campaigns created by the Bobsled team helped the brand reach new audiences and engage shoppers, generating over 7 million impressions. As of October 2019, Barcel has doubled its monthly unit sales each month since launch, with advertising attributed to Amazon sales representing nearly 50% of the sales growth. Even with Barcel’s sales doubling monthly, the advertising cost of sales (ACOS) has remained constant.
Above: Barcel’s 2019 Amazon revenue growth trajectory
Bobsled’s work with Barcel USA was selected for case study recognition by the Amazon Advertising team. To read more about the specifics of Bobsled’s work on Barcel USA’s Amazon account you can read the full Amazon Advertising case study here.
“Since we began working with Bobsled in March of 2019, we have seen consistent double digit sales growth each month on Amazon. Our Bobsled Marketing project manager has really taken the time to learn our product offering, which helps ensure we have the correct strategy to grow our business and takes the time to educate me so I can share learnings across functions in my organization. Additionally, our pay-per-click specialist does a great job developing our campaigns, but also takes the time to explain why.”
— Monique Williams, National Account Executive at Barcel
Feast Or Famine?
According to Stefan, there is nothing fundamentally different about PPC advertising for Grocery & Gourmet compared to other categories.
“In theory, the same PPC principles apply across the board,” Stefan says. “However, many Grocery & Gourmet brands don’t have the operational basics under control. Quite often, they’re generating decent volume on Amazon, but there’s massive untapped potential. Once everything’s been set up correctly, you can really accelerate growth with targeted advertising efforts.”
Do you represent a Grocery & Gourmet brand that needs assistance with the Amazon channel? Please click the consultation button below, enter your contact details and a Bobsled team member will be in touch to learn more about your situation.