By Scott Steinford, Managing Director, Trust Transparency Center
On Feb. 22, 2017 Amazon entered the dietary supplement market with four products. As of Aug. 6, 2018, that number has grown to 30 SKUs, representing a 750% increase. Ten products were added between the last week of July and first week of August. Amazon doesn’t appear to be competing on price in this category. It’s trying to stand out through transparency practices.
For example, while none of the original products included ingredients sourced from China, 19 of the current 30 SKU’s contain ingredients sourced from China and Amazon calls out its ingredient sourcing on its packaging. Amazon Elements takes varying approaches to address the sourcing from China question. Many of the pages for products with ingredients sourced from China include a Frequently Asked Question section on the product page addressing the issue. Some examples:
Why is your Biotin sourced from China?
China is the leading supplier of biotin. In fact, according to data from the US Department of Commerce and the US International Trade Commission, 90% of all biotin by weight imported into the US in 2016 originated from China. We rigorously test every batch of supplements we produce for potency, purity, and integrity. Review our test results on this page or by scanning your bottle. For more information on sources of biotin, refer to the US International Trade Commission’s website at www.usitc.gov.
Why are ingredients sourced from China?
Suppliers in China are required by U.S. law to meet the same safety standards as suppliers in the U.S. or any other country.
To further demonstrate its commitment to transparency, Amazon has identified Arizona Nutrition as the Amazon Elements contract manufacturer. Arizona Nutrition also manufactures the Whole Foods 365 line. The Whole Foods 365 line contains many SKUs, so it stands to reason the Amazon Elements product pipeline possibly originates from the retail sales analysis in addition to the obvious massive data available from Amazon.com itself.
Amazon Elements supplements are appearing to pick off private label products and it is likely the total launch will include at least all of the products currently manufactured for the Whole Foods 365 brand.
From a promotion standpoint, Whole Foods running its annual 25% off supplement sale is nothing new, but this year it involved a cross promotion with Amazon Prime.
Amazon Prime subscribers could go into the Whole Foods Market store and “reserve” their products for the week preceding the weekend sale. Surprisingly, no significant marketing for the Amazon Prime/Whole Foods 25% off program was noticeable online.
Amazon Prime has been running various promotions of similar, but lesser value in various locations on a more ongoing basis. And, Amazon Prime members also save 10% on sale items at Whole Foods stores plus have access to special sales, such as the Amazon Elements Iron 18mg SKU being offered at a discounted price of $5.96 for Prime Pantry users (down from $11.99).
Only recently has Amazon aggressively promoted its own brand. There have been no significant announcements of the brand, but it is clear the placement of sponsored Amazon Element products is becoming more prevalent. During searches for this article, sponsored ads for Amazon Elements products were repeatedly identified including sponsored ads for Melatonin, Lysine, Calcium, Vitamin C, Turmeric, B Complex and Vitamin B12 and an equal number of Amazon’s Choice designations were found to support the brand.
So where does that leave the market?
The Amazon Elements line isn’t going anywhere, so brand manufacturers and natural food retailers need to up their game. Transparency, as it relates to quality, continues to be the primary differentiator offered by the Amazon Elements brand as none of the products seem to offer any other added value. Transparency continues to be a consumer expectation. Amazon is combining online and brick and mortar marketing successfully in this space for its Prime Members so retailers that have customer/member incentive programs should take note.