Amazon’s Digital Warehouse Takes On Costco By Selling Bulk Goods
Prime members will be able to purchase products from Pantry next year.
In competition with brick-and-mortar stores like Costco and Sam’s Club, Amazon is looking to expand its business into the giant consumer package goods market. The e-retailer giant will introduce a new business called Pantry in 2014, where Prime members can purchase bulk-sized goods and have it shipped to their home.
For each purchase, shoppers can stuff as many items into a set sized box, which has a specific weight limit. As long as the products fit and stay within the maximum weight limit, Amazon will only charge a small fee for shipping. In the initial service offering, Amazon will have about 2,000 of the most common household brands ready for shipment. Whether it is cleaning supplies, kitchen necessities, or food and beverage, Pantry will meet all consumer requests.
The current consumer packaged goods, or CPG, market brings in about $850 billion a year, a huge gold mine for Amazon to tap into, if it can work out some of the problems inherent in shipping items with larger proportions. Amazon has all the right pieces of the puzzle to make Pantry work: a strong relationship with Prime users, its established infrastructure and its aggressively growing online channel.
According to an insider source, Amazon has already designated at least four fulfillment centers to meet Pantry orders. With a potential $222 billion revenue in the CPG market underway, 2014 is looking to be another successful year for Amazon.
Source: USA Today