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The race to capture repeat purchases of 40 million first-time U.S. online grocery and consumer products shoppers will place Amazon on a collision course with omnichannel players such as Walmart. Amazon, smelling blood in the water, is targeting CPG as a growth vertical through Prime, subscription offers and the introduction of Amazon Pantry. Procter & Gamble and other CPG powerhouses are making significant investments on the platform in merchandising, search and reviews, as well as co-location distribution arrangements.
L2 Case Study: Seventh Generation and Amazon Search
November 16, 2015
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When we published our first Amazon report in 2014, Seventh Generation showed up on first-page search results against relevant home care-related searches more than any other home care brand. Why? To decide who shows up in search results, Amazon's algorithm considers a number of factors, the most important of which is sales volume. And consumers are driven to shop online for specific goods that have limited in-store distribution—for example, Seventh Generation. However, over the past year we've seen large CPG enterprises with deep pockets such as Unilever and Procter & Gamble ramp up their investment on Amazon, for example around product page merchandising and media investments. In the face of this heightened investment which translates to sales and therefore search visibility, Seventh Generation's search performance has markedly declined across a number of category terms. For example, while in July of 2014 the brand controlled 19% of first-page search results for laundry detergent searches, a year later they only controlled 12%. Dialing in deeper around laundry detergent, we can specifically see that Seventh Generation product listings have been displaced by rising placement of Arm & Hammer products. However, this current state is far from stable—for example, ownership of the top search positions are regularly in flux. Brands distributing on Amazon.com should regularly monitor their search performance to benchmark competition around priority products.
L2 Research Briefing
At this member event, Maureen Mullen, L2 Co-Founder and Chief Strategy Officer, will employ our data-driven approach and tactical recommendations to help brands understand challenges, opportunities, and best practices when partnering with Amazon and how the platform is changing the face of modern retail.