Online sales made up 90% of the growth in the CPG industry last year, highlighting a fast-growing segment in an otherwise slow-growth industry. A common theme we are seeing among CPG brands is implementing an omnichannel strategy to satisfy customers and stay competitive in today’s CPG marketplace. With Amazon’s prominent ecommerce dominance, it’s critical for brands to adopt an Amazon strategy.

1. Successful CPG Brand’s
Amazon Strategy
Trends and Best Practices for Succeeding in Amazon’s Competitive Marketplace

2. Today’s Logistics
● Session recording and slides will be sent
● Submit questions to our panelists
● Join in on our poll questions throughout
● Resources available as handouts
Persephanie Arellano
Webinar Coordinator

3. Overview Solutions

4. Today’s Speakers
Russ Dieringer
Executive Director,
eCommerce Council
Tony Heuer
Marketplace Channel
Analyst
Leo Carrillo III
Manager, Amazon
Marketplace Channels
Erik Simon
Head of Business
Development &
Marketing

5. Today’s Agenda
● Latest Updates on the Growth of CPG Online Purchases
● Amazon’s Annual Performance & Grocery Plans for ’19
● Ad Strategies to Improve Your Amazon Organic Rank
● Developing a Customer Lifetime Strategy for CPG Brands
● Proactive Process for CPG Inventory Management
● Benefits of Auto-Repricing & New SKU Creation
● Q&A

6. POLL QUESTION
IS YOUR CPG BRAND ALREADY SELLING ON
AMAZON?
● Yes
● No

7. Cleveland Research Company
eCommerce Council
Designed for manufacturers selling into Amazon and other
omnichannel accounts like Walmart and Home Depot
● “Sharegroup on Steroids”
● 143 Members with 98% Renewal Rate
● Proprietary, Forward-Looking Research
● Annual Summit
● Weekly Roundtables
● 1-on-1 Analyst Engagement
Russ Dieringer
Executive Director,
eCommerce Council
rdieringer@cleveland-research.com
Important disclosures may be found in the appendix

8. Copyright 2017 - Q4 Amazon Virtual Summit
Q&AMarket Snapshot
2019 eCommerce
Performance
Benchmark
What CRC Will Cover

9. Copyright 2017 - Q4 Amazon Virtual Summit
US Market
eCommerce AND Stores Growing
• Healthy economic growth
• Low unemployment rate
• Decade long bull market run
Healthy Consumer
Source: US Census Data

10. Forecasting ’19 to Slow
• Law of Large Numbers
• Profit Focus
• More competitive market
• Potential Disruption from 1P to 3P transition
• Potential Offsets
• Return to top-line growth focus
• Advertising business
• Grocery
• B2B
Amazon Outlook
Source: Company Filings, CRC Estimates

11. Copyright 2017 - Q4 Amazon Virtual Summit
Multifaceted
Business
Amazon’s growth has been driven by
multiple components over the last few
years, helping lead revenue higher and,
importantly, profitability.
Components Driving Growth
Source: CRC Estimates

12. Survey Background
SURVEY BACKGROUND
SALES MIX IN 2018
Amazon2
49.3%
eCommerce1
11.0%
CATEGORIES
food & CPG 35.4%
hardlines 42.5%
other 16.5%
softlines 5.5%
eCOMMERCE BUSINESS SIZE
$3-5M 4%
$5-10M 17%
$1-3M 11%
$20-50M 21%
$10-20M 11%
$50-100M 15%
> $100M 18%
Annual Performance Benchmark
● 130+ companies completed the survey in late January 2019
● Mixture of CPG, Food, Hardlines and Softlines companies
● Focused on better understanding growth, profitability, future opportunities
& Amazon program performance
Source: CRC’s eCommerce Performance Benchmark, 2019
1) eCommerce figure is the percentage of total sales
2) Amazon figure is the percentage of total eCommerce sales

13. What will mix look like tomorrow?
CURRENT & EXPECTED SHIFT OF SALES TO
eCOMMERCE
Source: CRC’s eCommerce Performance Benchmark, 2019

14. How optimistic are brands for ’19?
Brands saw growth decelerate from 2017 to 2018,
at least partially driven by retailers focusing more
on profitability last year
eCOMMERCE GROWTH
EXPECTATIONS
Source: CRC’s eCommerce Performance Benchmark, 2019

15. What channels are brands focusing on?
Source: CRC’s eCommerce Performance Benchmark, 2019
WEBSITES SUPPLIERS SELL THEIR PRODUCT ON

16. Opportunities Beyond Amazon
Source: CRC’s eCommerce Performance Benchmark, 2019
WAYFAIR
KROGER
AMAZON
WALMART
TARGET
HOME DEPOT
LOWE’S
GROWTH IN 2018 EXPECTED GROWTH IN 2019
Note: The data in this chart refers to the eCommerce portion of these retailers.

17. Copyright 2017 - Q4 Amazon Virtual Summit
Amazon in 2018
• Net 10% saw better than expected
performance
• Grocery brands were generally
disappointed due to Fresh lagging,
little integration with Whole Foods,
and difficulties in programs like Pantry
Brands’ Experience on Amazon Last Year
MUCH BETTER
THAN EXPECTED
BETTER THAN
EXPECTED
IN LINE WITH
EXPECTATIONS
WORSE THAN
EXPECTED
MUCH WORSE
THAN EXPECTED
Source: CRC’s eCommerce Performance Benchmark, 2019

18. Copyright 2017 - Q4 Amazon Virtual Summit
Largest Dollar Growth Opportunity
Percentage sales
may be slowing,
yet absolute dollar
growth remains
the largest on
Amazon…
Source: CRC’s eCommerce Performance Benchmark, 2019

19. Less Profitable
• Delisting items (CRAP)
• ASIN suppression
• SIOC requirements
• Increased asks
• AVS program more expensive than SVS
• Private label
• Greater ad spend required
Profitability Comparison
SIGNIFICANTLY MORE
PROFITABLE
AMAZON 2019 PROFITABILITY EXPECTATIONS
RELATIVE TO OTHER ETAILERS
MODESTLY MORE
PROFITABLE
EQUALLY AS
PROFITABLE
MODESTLY LESS
PROFITABLE
SIGNIFICANTLY LESS
PROFITABLE
Source: CRC’s eCommerce Performance Benchmark, 2019

20. CRaP Impact
NONE
< 5%
5 – 9%
10 - 19%
20 - 29%
30 - 39%
40 - 49%
50% +
% OF ITEMS DELISTED DUE TO
AMAZON’S CRaP METRIC
40%
30%
29%
VENDORS’ EXPECTATIONS OF AMAZON DELISTING
ITEMS IN 2019 VIA THE CRaP METRIC
Same amount of items will be CRaP’d out vs. 2018
Fewer items will be CRaPed out vs. 2018
More items will be CRaPed out vs. 2018
% of
Products
delisted
Source: CRC’s eCommerce Performance Benchmark, 2019

21. Copyright 2017 - Q4 Amazon Virtual Summit
Amazon Programs
Varying degrees of success
• Amazon Business saw the best growth
• Prime Now saw the biggest step up in
brand participation compared to a
year ago
• Pantry was a bona-fide disaster
Amazon Program Opportunities
PARTICIPATION,
2018
AMAZON BUSINESS
SUBSCRIBE & SAVE
AMAZON PANTRY
PRIME NOW
AMAZON FRESH
GROWTH,
2018
Note: Participation refers to the percentage of vendors that
have participated in each program for at least one year.
Growth refers to the 2018 Y/Y percentage growth of programs
vendors participated in for at least one year.
Source: CRC’s eCommerce Performance Benchmark, 2019

22. Growth & Profitability
Where are the best opportunities
● Retail market remains healthy
● Amazon remains the largest growth opportunity from a dollars perspective
● CPG brands see additional opportunities with Walmart & Kroger
● Profit focus will remain in ’19 – update your financial plans, focus on fastest
growing Amazon programs, be prepared to spend more on advertising this
year
The Year Ahead
Appendix: Antitrust Disclosures
It is the policy of Cleveland Research Company to comply fully with the antitrust laws set forth by the United State Federal Government and various state laws. Our research is intended to be utilized as a resource in accordance with those established antitrust laws and regulations. The information transmitted is
intended only for the person or entity to which it is addressed. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the
material from any computer.

23. Copyright 2017 - Q4 Amazon Virtual Summit
Follow the link to download the full copy
of our annual performance benchmark
study:
https://www.clevelandresearch.com/ecom/benchmark/
Download CRC’s Benchmark Study
Russ Dieringer
Executive Director,
eCommerce Council
rdieringer@cleveland-research.com

24. POLL QUESTION
WHAT CPG CATEGORY DOES YOUR BRAND
FALL UNDER?
● Grocery
● Supplement
● Beauty & Personal Care
● Home Supply
● Baby

25. Growth of CPG Online Purchases

26. ● Online sales made up 90% of the growth
in the CPG industry last year
● U.S. digital shoppers are looking for
convenience on ecommerce for everyday items
Source:EMarketer

27. ● Brands can’t afford to not sell
on Amazon in order stay to relevant
and competitive in today's marketplace

29. Positioning on Amazon

30. ● Amazon serves as a revenue and brand
growing opportunity for CPG brands
● Digital shoppers research products
online before purchasing
● Positioning your brand on Amazon allows
you to attract customers through your
products details and insight

31. ● CPG brands selling on Amazon
enables extensive enhancive
branding options
● Increase your conversions on
the Amazon Marketplace
Enhanced Branding

32. Advertising Strategies for CPG Brands

33. ● 70% of all people shop on
the first page listing on
Amazon
● Use Amazon Advertising to
boost your organic
ranking

34. Bidding Strategies for CPG Brands

35. 1. Keyword bidding
2. Bidding on product
detail page
3. Brand vs non brand
competitor terms

36. POLL QUESTION
DO YOU KNOW YOUR BREAK EVEN ACOS?
● Yes
● No
● Maybe

37. What Is a Good ACOS?
TARGET ACOS BREAK EVEN ACOS

38. What’s a Good ACOS?
AMZ FEE
COGS
PROFIT
BEFORE
PPC SPEND
BREAK
EVEN
ACOS
TARGET
ACOS
TARGET
PROFIT
MARGIN
25%
25%
50%
25%
----------------------------------------------------------
ACOS < 50% : ADS ARE PROFITABLE
ACOS < 25% : HIT YOUR TARGET PROFIT MARGIN
----------------------------------------------------------
50%
25%

39. Lifetime Value

40. New to Brand Metrics for CPG Brands
● Measures orders & sales of your
products generated from first-time
customers of your brand
● If the shopper has not purchased from
your brand within the 12 month look
back window, the order is considered
new-to-brand

41. Why is understanding
Lifetime Value
important for CPG Brands

42. Brand Agnostic to Brand Loyalty
$ubcribe & $ave

43. Copyright 2017 - Q4 Amazon Virtual Summit
Grow Revenues by Generating More
Search Results - Without New
Products

44. A platform that helps eCommerce merchants
manage inventory, listings, shipping & more
on Amazon & 20+ other marketplaces.
About
Solid Commerce
Listing Tools
Inventory
Management
Content
Management
Automatic
Pricing &
Repricing
Orders &
Shipping
Management
Dropship
Management
● 1st group of integrators to support Seller
Fulfilled Prime
● 1st group invited by Amazon to Seller
Central App Store
● Member of Amazon’s Marketplace
Developer Council
● Full ability to sync FBA with non FBA
Warehouses

45. Select Customers:
In 2018 Solid Commerce Managed:
Packages
Shipped
Inventory
Managed
Retailers, Brands &
Manufacturers
Gross Merchandise
Volume
SKUs
Managed

46. Erik Simon
VP, Marketing & Business
Development
Today’s Speakers

47. The Whole Presentation in 1 Line
You Can Grow Revenues by Generating
More Product Search Results - Without
Any New Products

49. POLL QUESTION
HAVE YOU EVER USED VIRTUAL KITS &
BUNDLES?
● Yes
● No

50. POLL QUESTION
DO YOU CURRENTLY USE DROPSHIPERS?
● Yes
● No

51. Virtual Kits & Bundles
(Creating More From Less)

52. Wouldn’t it be great if 2 SKUs Created 4 ASINs?
SKU 1 SKU 2

53. They Can: 1 + 1 = 4
ASIN 1
ASIN 2 ASIN 4
ASIN 3

54. Virtual Kits & Bundles - Explained
• Product combinations are created only in software
• No physical bundles exist in your warehouse
• Products are stored individually
• Products are combined into kits & bundles at time of sale & shipment

55. Virtual Kits & Bundles Can Create New “Inventory”
ASIN 1
ASIN 2 ASIN 4
ASIN 3

56. Virtual kits & bundles
= ASIN Alchemy
Virtual kits & bundles = ASIN Alchemy
Unlike Alchemy, virtual kits &
bundles really creates “ASIN Gold”

57. ASIN Alchemy Helps You Sell More
• With virtual kits & bundles, 2 SKUs = 4,5,6 or more ASINs
• More ASINs = More Search results from limited product set
• Occupying more search results = more sales
• Virtual kits & bundles can help you sell more

58. 2 Steps to Virtual Kits & Bundles
1. Creation - Configure Product Combinations
2. Real-time Inventory Updates

59. Step 1: Creating Virtual Kits & Bundles
100 Baseballs in stock
75 Bats in stock
Inventory software
tells me
33 Multipacks – Unique ASIN
75 kits – Unique ASIN

60. Step 2 = Real-time Inventory Updates
As you sell individual components and virtual multipacks, you need need
inventory software that can provide real-time updates on how many
individual components and multi-packs or now available

61. Example: Real-time Inventory Updates
Had 110 Baseballs in
stock - Now Have 42
Had 75 Bats in stock
- Now Have 28
Inventory software
tells me
Was 33 Multipacks – Now 14
Was 75 kits – Now 28

62. Summary: Virtual Kits & Bundles = ASIN Alchemy
• Just as Alchemy was a belief in creating gold….
• Virtual kiting & bundling can create Product Gold by creating multiple
listings without need of actual physical bundles
• Is especially useful when dealing with 100’s or 100’s of SKUs
• In Amazon, works only for merchant fulfilled product, not FBA

63. Dropship Automation
(Selling what you don’t have)

64. Common Problem: To Sell What You Don’t Have
• Drop shipping Solves the age-old problem of how to sell products
without investing in inventory
But….
• Drop shipping creates a new problem when selling online

65. Main Drop Shipping Challenges
• Updating quantities for multiple Products = time consuming
• Maintaining Profit margins for fluctuating costs = difficult & tedious
• Sending orders to suppliers in real-time in time consuming
• Retrieving tracking numbers from drop shippers and returning these
to Amazon in real-time is difficult.

66. Drop Shipping Without Automation is Not Scalable
Inventory Levels
Orders
Tracking
2 Suppliers = 6
Connections with
Amazon Store
Suppliers Store Connections
Inventory Levels
Orders
Tracking

67. Automated Drop Shipping is Highly Scalable
Inventory
Software
Inventory Levels
Orders
Tracking
Suppliers
Inventory Levels
Order
s
Tracking
2 Suppliers = 1
Connection with
Amazon Store
Store Connections

68. Summary: Automated Drop Shipping Grows Sales
• Speeds inventory quantities
• Automatically updates profit margins for fluctuating cost of goods
• Automates return of tracking information to maintain seller ratings
• Is an inventory multiplier for your Amazon or eCommerce Website

70. Think of Seller Fulfilled Prime as a Sales Engine
• Seller Fulfilled Prime is a shipping program. But….
• As an engine that makes all your self-warehoused inventory Prime
eligible, it is also a sales engine.
• More Amazon Prime inventory = more Buy Box wins = more sales

71. Prime is Where the Money Is

72. Prime Buyers are the Best Buyers
• Prime subscribers order more times per year
• Prime subscribers spend more on average, per order
• Seller Fulfilled Prime gives you access to his audience without the need of FBA
• Amazon estimates SFP sellers see a 30% - 40% increase in sales

73. SFP Inventory = More Sales
• If you can fulfill the requirements of SFP, and you are not doing so, you
are leaving money on the table.
• By making all inventory Prime eligible, SFP becomes a sales engine.
• Simply using Seller Fulfilled Prime = More Sales

74. Quick Recap: Grow Revenues by
Generating More Product Search
Results Without More Products
1. Use virtual kits & bundles to create more Products and
therefore more listings from limited inventory set
2. Grow product catalog via dropship automation
3. Sell more SKUs as Prime via SFP label printing

75. erik.s@solidcommerce.com
solidcommerce.com/amazon-growth

76. Q & A
Russ Dieringer
Executive Director,
eCommerce Council
Tony Heuer
Marketplace Channel
Analyst
Leo Carrillo III
Manager, Amazon
Marketplace Channels
Erik Simon
Head of Business
Development &
Marketing

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