How reduced SKUs impact Amazon Fresh merchandising

Retail analysts Brick Meets Click studied the dozen Amazon Fresh stores in southern California and Chicagoland and found Amazon’s physical grocery store has a SKU assortment that is half the size of a traditional grocer — a move that could benefit its private brand products.

The Barrington, Ill.-based analysts founded by Bill Bishop, a 2020 Private Label Hall of Fame inductee, posted a preview of its research, demonstrating that whereas a traditional grocery store carries around 30,000 SKUs, Amazon Fresh is carrying around 16,000. The reduced assortment allows for the store to operate in a smaller footprint (perhaps closer to that of an Aldi) and has a noticeable difference in a reduction in flavors, package sizes and facings, according to Brick Meets Click. 

The research said Amazon’s SKU reduction in the stores lowers operating costs, improves ROI, and SKUs put less dependence on national brands — building up a private brand program it knows speaks to the customers it serves and focusing on more localized products at each store.

In fact, Brick Meets Click looked at the beer, wine and condiments categories in each store and found only 8% of beer SKUs were found in all 12 stores, 18% in wine, and 43% of items in the condiments aisle were found in all stores.

Lastly, the preview of the research noted Amazon’s focus on produce, as being “first in the door,” and given prominent merchandising. The assortment settles at around 300 different produce items in the store.

Go here for the full blog post on its Amazon Fresh assortment research.