Snacks & Candy

Amazon Sets Agenda to Cut Out Brick-and-Mortar

Online retailer invites suppliers to blow up traditional packaged-goods model

SEATTLE -- Amazon has extended invitations to major snack manufacturers, including General Mills and Mondelez, for a meeting to discuss completely disrupting the traditional retail model, a report from Bloomberg indicates.

The meeting, to be held in May at Amazon's headquarters, is the first designed to start a conversation about ways major consumer packaged goods (CPG) manufactures can skip retailers such as Target, Wal-Mart and presumably convenience stores, and instead sell direct via Amazon channels.

"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," the invitation reads.

Successful transition out of brick-and-mortar retail would affect strategy away from "creating products that stand out in a [Wal-Mart] aisle," the report said. Rather, the focus would be on product designs that would support efficiency across that coveted "last mile," the moment the product is ordered, leaves a fulfillment center and arrives on the customer's doorstep. Meeting the Amazon expectation could mean reconfiguring everything from product formulation to packaging. For example, brightly designed, flimsy pouches of grab-and-go cookies would be replaced with more durable, plainly designed boxes. "Plants could spit out products for individuals rather than trucks full of inventory," the report said.

“Most of these people haven’t been interested in e-commerce because e-commerce has been such a small piece of their overall sales,” Melissa Burdick, vice president of e-commerce at The Mars Agency marketing firm, told Bloomberg. “But we’ve reached a tipping point. We’re at a time when companies are ready to start figuring this stuff out.”

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