Prime Pantry has ended. So what? Now what?

Amazon’s ending of Prime Pantry is not particularly surprising. Being the customer-centric company it is, Amazon is always looking for ways to reduce friction and complexity from its shopping experience. To use Prime Pantry, consumers had to go to a different part of the website and pay an extra set of fees, both barriers to long-term adoption. 

So what?

The move is good for brands because it streamlines a lot of the operational hassle of having to manage separate ASINs and separate content on the site. However, it will be important to watch how Amazon manages the assortment of unprofitable, under $10 products offered through Pantry. In the short term, it looks like Amazon will transfer most of its Pantry assortment over to .com. But long term, many of these products may be put on “CRaP” lists or designated as Add On items or Exclusively for Prime. Anyone of these scenarios could impact sales volumes. However, we didn’t see this happen when Pantry ended in Europe earlier this year; and we don’t expect that to be the case in the U.S. either. 

Now what?

1. Item profitability matters more than ever. Now that Pantry items can be bought without fees, brands should be partnering with Amazon and finding ways to improve unit-level economics through price / pack optimization. Most leading brands are already doing this. In fact, a CPG client just completed a price/pack optimization study with us and was able to validate major growth potential with large size packages it doesn’t currently carry on Amazon, which also offer higher margin potential.

2. Continue to watch price dynamics off and on Amazon. As our ongoing Price Wars research shows, Amazon refuses to lose on price to Walmart (or anyone for that matter). So any promotions Walmart or Target run on Pantry items will only compound profitability issues. Tight coordination between your Amazon and omni-customer and shopper marketing teams will be critical.

3. Keep an eye on 3P sellers. 3P sellers are skilled at exploiting gaps in your assortment on Amazon. As products transition from Pantry to .com (and potentially as they are delisted), 3P sellers will account for a higher percentage of sales and win a higher share of search in organic results. We saw that during last year’s Super Bowl when 3P sellers capitalized on awareness created for unlisted Pop-Tarts products. Many of these sellers had poor quality product pages that poorly represented Pop-Tarts’ brand.

4. Prepare for more consolidation. Amazon has a history of launching semi-standalone offerings (like Pantry) and eventually folding them into the main program. There are rumors it is also happening with Fresh/Prime Now. Ultimately, consolidation will make it easier for brands to manage Amazon and open up greater data access. In the meantime, make sure you have full, holistic coverage of your Amazon sales & market share performance — across .com and F3 (Fresh, Prime Now and Go). (If you don’t currently have F3 data, talk to your account manager as Profitero now offers it.)

In short, Prime Pantry’s end is a good thing, for consumers and for brands. But brands will need to carefully scrutinize their assortment and digital shelf strategies to fully capitalize.

Top 25 Selling Products on Prime Pantry (Jan 2020 to Dec 2020)

Ranked by how consistently the product appeared in Amazon’s Best Seller Rankings 
Source: Profitero

Prime Pantry’s importance to various categories

(Based on Profitero sales estimates)