One of the fastest growing eCommerce categories right now is grocery. All the major platforms are constantly competing to get ahead in the battle for market domination. Amazon, Walmart and Target all are positioned well for growth over the next 5 years – when the market is expected to reach over $100 billion in annual spending. Learning how to sell groceries on Amazon can help you take advantage of that trend.
The grocery category faces unique challenges like no other category. Conquering logistics, fulfillment and consumer confidence are the major obstacles that grocery brands and eCommerce platforms must overcome. Amazon has created a process to help tackle all of these hurdles. Which means that as a seller you have strict guidelines to follow on the platform.
We are going to take a look at what you need to do to sell groceries on the Amazon platform. We will start by looking at getting approved for grocery and then see what Amazon’s requirements are for the products themselves. Finally, we will talk about what the Amazon grocery fees are and our best practices for selling groceries.
Get Approval to Sell Groceries
The first step to selling groceries on Amazon is to get approval for the category. Groceries are a restricted category on Amazon and you will first need to get ungated to sell them. You will also need to apply for additional approvals if your products are organic or if you use organic in your listing. Amazon verifies that your product complies with USDA regulations and requires proof that your products are compliant.
The heavy restrictions around groceries on Amazon is understandable. They need to provide the best experience to their customers – and that includes selling safe products especially when it comes to a consumable like food or beverage.
At a minimum, you must have a professional selling account to get ungated for the grocery category. As part of the application Amazon will ask you to submit product invoices or Quality Management System (QMS) to ensure that your products are safe to sell to customers. Your Amazon Account Health is also an important factor and you need to meet or exceed the thresholds that Amazon has set. The current thresholds in 2019 are:
- Order defect rate (ODR): < 1%
- Pre-fulfillment cancel rate or Cancellation rate (CR): < 2.5%
- Late Shipment Rate (LSR): < 4%
Amazon can take up to a week or more to determine if your application is acceptable. We have found that the majority of applications are answered before then however.
Requirements to Sell Groceries on Amazon
Amazon has additional requirements apart from getting ungated for the grocery category. You must be able to guarantee freshness and safety of your product packaging, clearly identify expiration dates and create your product pages in a certain way. We’ve detailed all the specific requirements that Amazon has for this category.
Item Packaging Requirements
Food products need to be packaged properly to be sold on Amazon. As we said before, Amazon needs to ensure that the food products they are selling are safe. And that is especially true after Amazon’s settlement with Germany that says Amazon can be held liable for third-party sales.
Products need to be properly packed and sealed to protect the product from going bad or becoming damaged. The packaging must ensure the quality and safety of the food. The products all need to be shipped to ensure that the packaging remains intact and is not damaged in route. Product packaging must also clearly state the net weight, expiration dates and any dietary claims such as potential food allergens. Finally, the product packaging must include the name and address of the packaging company.
Shelf Life Requirements
The majority of grocery products apart from possibly twinkies have an expiration or best by date. These are to ensure that the products are safe for consumption. Amazon requires that any perishable products sold through FBA have a shelf-life greater than 90 days. They also require that perishable goods that are within 50 days of expiration be removed from fulfillment centers and will automatically remove and dispose of units that are less than 50 days from expiration.
Products that are meltable are only accepted at fulfillment centers from October to April. And even then, Amazon requires that they be able to withstand a minimum temperature of 50 degrees and maximum of 100 degrees Fahrenheit. If the product quality is affected by moving outside of that range Amazon will also dispose of the units.
Along with product requirements, Amazon requires specific things to appear on the Amazon listing for grocery products. Each grocery product must have the nutritional and ingredients information for the product visible in one of the product photos. The product photos should be a minimum size of 300-dpi. The images can also only show the products for sale and not any products that are used in combination with the product. For example, showing a smoothie kit with a blender.
Shipping and Labeling Requirements
Finally, Amazon has rules for shipping produce products to fulfillment centers. They require that each shipment have the following information:
- The name and address of the shipper or owner
- Th name of the person to whom the shipment is being sent
- The name of the country, state or territory where the contents were grown
- A statement of the shipping contents.
Agricultural products are closely monitor by U.S. Customs to avoid the importation of invasive species and apply tariffs and taxes to products competitive with U.S. companies. These are minimal requirements that Amazon has for shipping fresh goods, but they also note that local and state governments may have additional policies that sellers need to follow as well.
Grocery Category Fees
The grocery and gourmet food category have a fee structure that is different than most on Amazon. Amazon actually charges different fees depending on the price point of the product. Previously fees had been a flat 15% across the entire category. But Amazon has since lowered them to try to encourage more grocery brands to sell on the platform and increase its selection for shoppers.
Products under $15 only have an 8% fee on Amazon. The fee for products over $15 remains at 15% however. This fee structure is also an incentive that Amazon tries to offer sellers to stay on their platform versus selling on other platforms like Walmart who have a flat 15% fee across the whole category.
Best Practices for Selling Groceries on Amazon
Implementing a few different features and techniques to your product listings can help you sell more product on Amazon. You should start by creating variation listings for all your grocery products that are the same product line. Using variations can help expose customers to other options within your brands from different sizes to flavors.
You should then consider implementing what we called tier pricing to encourage larger customer purchases. Groceries are consumable products and instead of hoping that a customer comes back to purchase from you again you should try to convert them into buying more than 1 unit at once. We recommend setting discounts for customers buying 2, 3 and 4 or more units as once. Increasing average cart value is one huge way to grow your sales in the grocery category.
Utilizing the correct images on your listing can also help you convert more shoppers into customers. We recommend using lifestyle images and graphics that explain the benefits or features of your grocery product. Nutritional benefits or special ingredients that are clearly spelled out in the images can help a shopper understand your product better and in shorter amount of time than reading the bullet points.
Finally, you should be taking advantage of advertising on Amazon to drive more traffic to your listings. Advertising costs in the grocery category are still relatively low compared to other categories on Amazon. Effectively using advertising can help you get more sales and rank hire on search results pages in the grocery category.
Start Your Grocery Brand on Amazon Today
The requirements to sell in the grocery category can be tedious. However, the brands that successfully navigate the obstacles can dominate on the platform for years to come. Getting additional visibility for your brand and its products can help you take advantage of the grocery eCommerce growth trend.
Following our best practice tips and ensuring that your brand meets all the requirements laid out here will help you sell groceries on Amazon. We have helped numerous brands take advantage of the platform and deal with the challenges Amazon throws in their way. Get started today with selling on Amazon and see how following these tips will help you grow your sales quickly.