Into the Digital Aisle: What is Driving Coffee Beverages as an E-Commerce Category?
Welcome the inaugural edition of ‘Into the Digital Aisle’, an exclusive partnership with Reviate, who will be creating content especially for Supplier Community. During the course of 2020, we will bring you actionable insights into the categories driving growth in Online Grocery. We begin with the category driving the single largest share of Amazon.com’s grocery revenue: Beverages.
Is there a particular subcategory driving growth within Beverages? To answer this question we analyzed the entire beverage sector. What we found was intriguing: Coffee Beverages are currently performing better than the rest. Why? And more importantly, what can suppliers learn from consumers’ growing willingness to purchase this category online? We’ve uncovered some surprising facts that can help brands understand the ever-changing landscape and grow cross-channel share.
Consumers are voting with their wallets at key price ranges, and brands that position their products within the $33 to $34 range are capturing the most volume.
Source: Reviate.com unit sales of top-selling Coffee Beverages on amazon.com during the last 30 days.
The difference that choosing the correct price can drive is staggering. In this category, our analysis sees competing products achieving a 32x volume difference when they are placed inside the key, high-volume price ranges vs those that are not. Finding the right price range can be like going from a garden hose of flow to a fire hose. What are the key price ranges for Coffee Beverages? They have shifted recently.
The top three are:
$33 to $34 (6x the category average sales)
$30 to $31 (5.4x the category average sales)
$34 to $36 (3.2x the category average sales)
These top price ranges are known price points for consumers. It is these ranges in which consumers give brands permission to sell Coffee Beverages. Brands that understand this know how important it is to ensure that products are positioned at the right price level to drive target volumes.
If your brand is suffering from diminishing unit sales in e-commerce channels, or if you are trying to understand where to target, consider moving your price into the closest higher-volume price range.
Contrary to a common but often mistakenly held belief, prices don’t only move down in order to increase volume. Sometimes they can shift up to a well-known price range and volumes will increase as a consequence.
High-volume ranges are shifting from competitive dynamics, and now brands that aim to capture luxury-oriented shopping occasions for Coffee Beverages must target the $34 to $52 range.
Source: Reviate.com unit sales of top-selling Coffee Beverages within three key Shopping Occasion groups on amazon.com during the last 30 days.
Opening Price Point and Discount shopping occasions are bounded within the $4 to $30 range. Mass shopping occasions occupy the remaining midsection of the price spectrum, from $30 to $34.
A good brand strategy often means aligning the price of your brand’s products with the expectations of consumers. For Coffee Beverages that means ensuring that your brand’s portfolio is positioned within the above price ranges (depending on your brand strategy) and covering the high-volume price ranges.
This may mean adjusting your prices to the closest high-volume price range. Below you’ll find some general guidance that shows how brands might reposition their price in order to better align with current shopping occasion types and higher-volumes.
Source: Reviate.com general guidance to consider as Coffee Beverages brands adjust prices to higher-volume price ranges.
A hidden area of opportunity is emerging at the $49-$50 price range, with two other emerging opportunity ranges as follows:
$49-$50 (3.3x the category average revenue per ASIN)
$38-$39 (2.1x the category average revenue per ASIN)
$34 to $36 $34-$36 (1.9x the category average revenue per ASIN)
These price ranges represent soft spots in the market where brands are achieving super-normal revenue per item, and are often the result of strong brands driving effective marketing efforts towards innovative and differentiated products. What this implies for your brand is that the path has been paved for you to offer bundles, higher quality products or innovative products at these price ranges, and thereby drafting behind the category leaders who are educating the consumers.
Consumers are responding quite well to products marketed with ‘Pod’ (as a Form) in the title of their product listing. There is a 23.6% correlation between sales and this feature, in fact. Other correlations (both positive and negative) include:
There are three implications for these recent trends:
- Ensure that product listings titles are optimized by including those keywords that are trending.
- As listing titles have limited characters, be highly selective as to whether negative correlation keywords should be granted prime real estate within the listing titles.
- As you consider product development and innovation for your brand, you may want to explore a Coffee Beverages priced in the $33 to $34 range with the following: Pod (Form), 30 Count (Quantity), and Blend (Feature)
In conclusion, brands that are successful on Amazon, like Nespresso for the Coffee Beverages category, understand the importance of pricing products at high-volume price points, and positioning products to capture trending interest in certain keywords.
By doing this well, our analysis shows that the difference between high-performing brands within the Coffee Beverages category is significant: 104x the revenue, 27x the revenue per ASIN, 4x the BSR rank, 9x the average review count, and 1x the average rating.
Will your brand be one of those that performs?