Amazon CPG Digest - 10.26.2024

Today I dive into Amazon’s upcoming Low Cost Store. Is it a threat to North American brands that invest so much in brand building? Or brands that rely on low price as moat?

And what is impact to CPG brands?

Unbranded and Unstoppable

What North American Brands Need to Know About the Amazon Low-Cost Store

Amazon plans to roll out Amazon's new storefront, tentatively named "Amazon Value," f that will feature only unbranded, low-cost items primarily sourced from Chinese sellers, covering popular categories such as fashion, home goods, and accessories.

Products will be be sold at heavily discounted prices, shipped directly from Amazon's warehouse in Guangdong, China, with a 9-11 day delivery window to US customers.

This storefront will be a separate app from the main Amazon store.

Key Features:

• Low Price Caps: Items like jewelry and bedding are capped at $8-$9, with larger items (e.g., sofas) capped at $20​. Sofa for $20?!

• Reduced Fulfillment Fees: Amazon offers lower shipping fees to sellers, cutting overall costs.

• Direct Shipping Model: Orders ship directly from China, bypassing U.S. fulfillment centers to keep costs low.

• Limited Returns: Items under $3 are not eligible for returns; others have a short return window.

• Unbranded Products: All items are labeled as “Generic” to simplify branding and lower costs​

Even if you lived under an e-commerce rock in the last couple years, you may have guessed this move is a pure reaction to rise of Temu and Shein marketplaces.

Let’s look at how it may impact CPG verticals.

In Amazon’s Low-Cost Store, CPG categories will be variably impacted. Some categories face high risk from low-cost unbranded competition, while others are relatively protected due to category-specific requirements

At higher risk are for market erosion are products taht align closely with the Low-Cost Store’s restrictions (unbranded, small-sized items, with a cap of $20) and are often viewed as interchangeable or consumable items.

Small home goods and accessories, low-cost apparel, beauty and personal care accessories (non-topicals), office supplies. Think cabinet door handles, kitchen towels, basic t-shirts and socks, headphones, office essentials.

Lower impact would be for consumables, topicals and higher compliance categories: food and beverage, beauty and personal care topicals, cleaning supplies, baby products, health related items.

Businesses at most risk: 100% Chinese manufacturing, that created branding and marketing for functional yet at the core undifferentiated products, who then sold to Amazon Prime shoppers for profit.

That would make it a majority of private label and pure Amazon FBA play businesses.

But even if you are a premium, consumable or topical product, it’s important to continue build moat.

Some thoughts to help isolate from initiatives like Low Cost Store:

Highlighting Quality, Reliability, Brand Identity: Buying a $1 soap dispenser begets expectations of a generic, and mediocre at best quality quality.  Even if you are a premium product continuing to build brand identity and customer loyalty through enhanced brand presentation, UGI content, great customer service is critical to build a moat against this Low Cost Store risk.

Leveraging Amazon’s Premium Content and Brand features: Premium A+ content, tools for cross sells, Subscribe and Save, Brand Followers, Brand Analytics data - some of the few tools and data on Amazon to really lean into brand building and differentiation.  

Developing Bundles, Exclusive, Limited Edition Products: Positioning beyond functionality at a good price is key. More nuanced ecommerce product merchandising through bundles, or value-added products is key.

Leaning into speed advantage: FBA is an obvious speed advantage for those instant gratification expecting North American customers.

As a savvy brand owner or a stakeholder you know that race to the bottom, solely price based strategy rarely builds a sustainable, profitable business.

Yet it seems that’s what Amazon is doing by trying to match Temu.

Does it have enough focus, discipline, and power to continue to push what’s always been best at: products assortment, competitive pricing, logistics, and putting customers first? And also built a generic, price and basic functionality driven store as a way to keep Temu at bay?

Time will tell. In the meantime, North Americans brands to watch and adapt.  

Unfiltered Thoughts about Q4  

As we roll through Q4, most Amazon sellers feel the pressure mounting. It’s the biggest revenue season of the year for many of you,, but it’s also the most demanding.

And not all sellers come out on top. For seasoned sellers, there’s a sense of familiarity with Q4, but here’s something most don’t talk about openly: no two Q4s are ever alike.

 And somehow every year the stakes feel higher than ever.

The well-known challenges are exhausting as is, and yet, the “invisible” hurdles are the ones that truly test your business. You might have prepared your inventory, fine-tuned your listings, and mapped out your PPC budget. 

But if 10 years in the space has taught me anything, it’s managing the intangibles is the real art: balancing margin and growth, making fast, insight-driven yet without 100% guarantee of success decisions, keeping business running amid unpredictable market shifts.

Why sellers struggle when it matters the most

The truth is, a Q4 strategy can’t be one-size-fits-all. Many sellers find themselves following the same advice: “spend big on ads,” “move your best products,” “make the most of gift-giving demand.” But these are only pieces of the puzzle. I think true success is really the ability to adapt as the season unfolds, to make strategic and tactical pivots based on real-time data and real time market dynamics.

Q4 can feel like an uncharted race — the finish line is there, but the route keeps changing. Each Q4 comes with its own “silent” hurdles, the kind that can pull your attention away from profits and drain resources, or ‘well, that’s a new one for us’ experiences. And that’s the difference: those who thrive know they need to be adapt and are supported, and that Q4 is an important building block of this growing business marathon - not just a sprint to Black Friday.

Winning This Q4 — and the Ones After

Truly successful (which in my book is growing AND profitable) Amazon sellers have few things in common: they know when to rely on expertise beyond their own, especially when the stakes are highest. They don’t follow trends, or fall to FOMO. But they do double down on opportunity times. Which often is Q4. 

If you feel you are not quite on top of the game on Amazon, or feel a bit of scrambling during this Q4, it’s ok. 

Because you can navigate this Q4 differently by considering a strategic partner (yours truly and my team) who’s been there, who knows the demands of the season, and who can help you move with confidence as Q4 evolves.  

 This isn’t about “extra support”; it’s about giving your business the kind of tailored, expert-driven insights that unlock growth — and set you up for a strong, profitable finish.

What will it look like this Q4 on Amazon for you?

Now is better than later. Start here

Saludos,

Irina