Have you ever thought about selling groceries on Amazon?
Many sellers tend to gravitate toward some of the more popular categories on Amazon like Home & Kitchen, Clothing, Beauty, or Toys & Games.
Those categories are great and can be profitable. But the grocery category is one of the few categories besides Health & Personal Care where people need to repurchase items regularly. By regularly, we mean more than once every 6 months.
The grocery market across the internet and on Amazon is continuously growing and Amazon has even stated recently that they plan to try and take more of the market share in the grocery vertical.
It makes sense as consumers grow more and more comfortable buying even perishable goods online and the never-ending busyness of the end consumer. This is why it was a great time to get into the grocery category 5 years ago and the opportunity is still just as good today.
But where do you start? And how can you have a better chance of success in a competitive landscape?
Fear not, my friend! We've put together the definitive guide on how to sell groceries to help you navigate the ins and outs of selling groceries on Amazon in 2023 and beyond.
In this guide, we’ll cover everything from getting ungated in the grocery category to sourcing strategies and best practices to help you have a successful grocery business on Amazon.
Let's dive in to what it takes to build an online grocery sales business on Amazon.
What is the Grocery Category on Amazon?
The Grocery & Gourmet Food category on Amazon is quite self-explanatory, really. All food and grocery items fall into this category and as you can probably imagine, this brings with it some additional considerations as a seller.
A quick look at the Amazon Movers & Shakers page for Grocery will show you exactly what products in this category are currently selling.
The grocery category can be especially lucrative as many of the items are considered to be "replens", which means customers will buy them over and over again.
One of the biggest hurdles of this category, like many others, is the process of getting ungated.
This small challenge actually makes this category even more appealing in my opinion, because many sellers won't go to the effort so they'll avoid the category, leaving more opportunity for you and I!
Let's discuss how you can get ungated to sell in Grocery.
Ungating the Grocery Category on Amazon
Before you can start selling groceries on Amazon, you’ll have to go through the ungating process.
This involves getting approved to sell food products in the grocery and gourmet food category, which in the past has been a bit more complex than getting permission for other categories.
However, once you’re ungated, you’ll gain access to a vast customer base that often buys food products over and over again and a fast-growing market.
In fact, 43% of people have purchased groceries on Amazon, and the online grocery market is growing at a clip of nearly 12% annually and predicted to reach over $250 billion in annual sales by 2025.
To get ungated, you’ll need to provide some documents to Amazon, such as invoices from a grocery supplier.
If you plan to sell groceries on Amazon, don't let this hurdle stop you. It's very simple. You can make an account with Frontier Co-Op's wholesale division and use the invoices to get ungated.
In addition, you’ll need a professional selling account and must adhere to Amazon’s strict food safety regulations, ensuring that your business operations comply with their guidelines.
Requirements for Approval
To get approved for selling groceries on Amazon, there are several requirements you must meet.
- You’ll need a professional seller account and invoices from wholesalers.
- If you plan to create new grocery product listings on Amazon, you’ll need to include at least one picture that clearly shows the ingredients list and nutritional information. This should not be an issue if you only plan to resell on existing listings.
- You will need to let Amazon know if you're a reseller/distributor, a manufacturer, or both.
You’ll also need to ensure that your products comply with Amazon’s shelf life requirements, which dictate that any groceries sold on the platform should be able to be consumed within 90 days of their expiration date.
This means if you think it will take 14 days from the time you purchase the item until it gets checked into Amazon and another 14 days before you sell the item it will need to have at least 128 days of shelf life on the product.
Benefits of Selling Groceries on Amazon
Selling groceries on Amazon offers several advantages for both new and experienced sellers. Some of the primary benefits include:
- High demand for grocery products on the platform, with many customers looking for convenience and variety when shopping for their household essentials
- Tapping into a broad customer base
- Benefiting from a low barrier to entry
- The ability to sell on multipacks and bundles
Another advantage is the potential for repeat customers, as many grocery items are consumables that need to be replenished regularly.
If you focus on high quality, in-demand products you can take advantage of the fact that people come back to Amazon for their grocery needs.
Essential Guidelines for Selling Groceries
To ensure a successful grocery business on Amazon, there are several essential guidelines you need to follow.
Meeting performance targets, adhering to packaging and labeling requirements, and complying with shelf life policies are all critical aspects of running a thriving online grocery store.
By maintaining a healthy seller account, providing accurate product listings, and following Amazon’s strict food safety regulations, you can ensure that your grocery business operates smoothly and effectively when selling food products.
Seller Performance Targets
Maintaining a healthy seller account and meeting performance targets are crucial for selling groceries on Amazon.
Your Account Health can be checked inside your Seller Central account, and it's important that you continually monitor this. Take a look at our Amazon Account Health Rating article for more detailed info on this.
Factors that contribute to a healthy Amazon seller account include:
- Keeping your order defect rate low (usually below 1%)
- Ensuring that you meet the seller requirements
- Fulfilling at least 98% of orders
- Maintaining a low pre-fulfillment cancel rate
To keep a low order defect rate, you should focus on:
- Providing high quality products
- Offering accurate descriptions
- Ensuring proper packaging
- Providing timely customer service
- Responding to customer inquiries quickly
These are key factors in maintaining positive seller performance.
Regularly monitoring your performance metrics and taking action if needed can help you stay on track and avoid potential account suspension.
Product Packaging and Labeling
Proper product packaging and labeling are essential for selling groceries on Amazon. This includes ensuring that the product name, name and address of the packager, expiration date, net content quantity and weight are clearly displayed on the packaging. For products with an organic claim, you’ll need to comply with specific requirements.
In addition to meeting Amazon’s packaging and labeling requirements, it’s important to make sure that your products are protected during shipping and easy for customers to open. This can help improve customer experience and satisfaction, ultimately leading to positive feedback and repeat business.
For example, polybagging liquids and powders can help safeguard products during shipping and enhance the customer experience.
Complying with Shelf Life Policies
Complying with Amazon’s shelf life policies is vital for grocery sellers. These policies ensure that customers receive fresh products and prevent inventory disposal due to expired items. Here are some key points to remember.
- Perishable products cannot be sold through FBA unless they have a shelf life of at least 90 days.
- Customers should always check product shelf lives before buying to ensure their items will last.
- It’s important to provide shelf life information through Amazon Seller Central to avoid potential issues with your account.
Failure to comply with Amazon’s shelf life policies can result in serious consequences, including account suspension. It’s crucial to keep track of your inventory and expiration dates, and to remove any items that are close to expiring from Amazon’s fulfillment centers. By adhering to these policies, you can protect your seller account and ensure the satisfaction of your customers.
Sourcing Strategies for Grocery Items
Sourcing grocery items for sale on Amazon can be done through various strategies, each with its own set of advantages and challenges. The three main methods for acquiring grocery items include wholesale sourcing, retail arbitrage, and online arbitrage. Depending on your unique business needs and resources, one or more of these strategies may be suitable for your grocery business.
Each sourcing strategy has its pros and cons. Here are some of the main ones:
- Wholesale sourcing provides the benefit of bulk discounts but requires significant initial investment. In The Wholesale Challenge Corey Ganim recommends $3,000 to $5,000 to get started.
- Retail arbitrage allows you to find niche products with a low cost of entry, but scouting for profitable deals can be time-consuming.
- Online arbitrage involves buying products from other online stores for resale on Amazon; however, it can also require considerable research and time investment.
Wholesale Sourcing
Wholesale sourcing offers a simple and scalable way to source grocery items, but competition can be fierce and if you don't do your due diligence, you might end up with a heap of inventory that you can't sell.
To succeed in wholesale sourcing, you’ll need to carefully evaluate suppliers and products to ensure profitability.
Despite the challenges, wholesale sourcing can provide several advantages. By buying in bulk, you can obtain discounts on your inventory, which can help improve your profit margins.
Additionally, working with reliable suppliers can help you maintain a steady supply of products, ensuring that you always have inventory available to meet customer demand.
Retail Arbitrage
Retail arbitrage allows sellers to find niche products and benefit from a low cost of entry. This sourcing strategy involves visiting physical stores, searching for discounted or clearance items, and reselling them on Amazon at a higher price.
You can even buy full price quite often and sell for higher on Amazon. Especially with seasonal products, regional goods, and if you look carefully you can find multi-packs and bundles that do well.
One of the main downsides to retail arbitrage is that it can be time-consuming and requires constant scouting for profitable deals. To some, however, this is part of the fun. I guess it depends what you're into!
Grocery sellers can benefit from this strategy by focusing on niche products with high margins, building a unique inventory that sets you apart from competitors.
Retail arbitrage also allows you to start small and grow your business over time, reinvesting profits to source more products and expand your Amazon business at your own pace.
Online Arbitrage
It's no secret that I love online arbitrage! Here's how it can work for sellers in the grocery category:
- Source products from online marketplaces and stores (similar to retail arbitrage, but you do it all online)
- Conduct thorough research using Amazon software and tools
- Compare prices across different online stores
- Calculate potential profit margins
This strategy can be lucrative, but it is also time-consuming and may require the use of specialized online arbitrage software to identify profitable opportunities. To succeed in online arbitrage, you’ll need to put in the necessary effort and follow these steps.
Online arbitrage can offer significant advantages for grocery sellers. Some of these advantages include:
- Diversifying your inventory by sourcing products from a variety of online marketplaces
- Finding unique, high-margin items to sell on Amazon
- Taking advantage of seasonal sales and promotions to increase profit potential
Best Practices for a Successful Grocery Business on Amazon
Positioning yourself for success in the grocery category on Amazon comes down to 4 main pillars, or best practices.
Prioritizing product quality
Using efficient packaging solutions
Leveraging replenshable items
exploring bundling opportunities
By focusing on these key areas, you can maximize your chances of success in the competitive grocery category and build a thriving online store.
As you embark on your journey to sell groceries on Amazon, remember that your success will ultimately depend on:
- Your ability to adapt to the ever-changing marketplace
- Staying informed about new trends and regulations
- Maintaining a customer-centric approach in all aspects of your business
With dedication and persistence, you can take a bite of the online grocery category pie!
Prioritizing Product Quality
Focusing on product quality is crucial for maintaining a healthy seller account and receiving positive feedback from customers. To ensure top-notch quality, you should prioritize:
- Proper preparation
- Packaging
- Sealing
- Labeling of food products
It's also important to make sure you have the necessary licenses and meet the requirements for selling food on Amazon.
This won't be an issue everywhere but some states may require special licensing if you plan to "repackage" grocery items. This can even mean just placing grocery items into a polybag.
Always consult your local laws and regulations.
By consistently delivering high-quality products and accurately describing them in your listings, you can establish a strong reputation on the platform and attract more customers to your store.
Providing excellent customer service and promptly addressing customer inquiries will further enhance your reputation and contribute to the long-term success of your grocery business on Amazon. If you're selling with Amazon FBA, which I highly recommend, Amazon themselves will handle all of your customer service duties.
Efficient Packaging Solutions
Efficient packaging solutions can improve customer experience and protect products during shipping, ultimately leading to higher customer satisfaction. For example, using polybags for liquids and powders can help safeguard products during shipping and enhance the customer experience. Additionally, ensuring that your product packaging is easy to open and provides a great e-commerce packaging experience can further improve customer satisfaction.
By paying close attention to the packaging and labeling of your grocery products, you can ensure that they arrive in perfect condition and meet customer expectations. This will not only help you maintain a positive reputation on Amazon, but also contribute to the growth and success of your online grocery business.
Replenishable Items
Identifying and focusing on replenishable items can help sellers maintain a steady stream of sales and reduce the time spent on sourcing new products.
Often referred to as 'Replens', Replenishable items may include:
- Canned goods
- Snacks
- Beverages
- Pantry staples
These are gourmet food products and grocery products with consistent demand and can be regularly restocked.
By concentrating on replenishable items, you can ensure a continuous flow of sales and save time on finding new products to sell. This can also help you build a loyal customer base that relies on your store for their recurring grocery needs, ultimately contributing to the long-term success of your Amazon grocery business.
Just remember that finding items that are replenishable is mostly a function of finding lots of products to sell and coming back to the items that do well long term.
Not everything will turn into a replenishable and if you go into with that midset you can be disappointed.
Exploring Bundling Opportunities
Bundling on Amazon can increase profitability in the grocery category by enhancing the perceived value of products and potentially saving on FBA fees. Bundling involves combining two or more complementary items and selling them as a single package, which can help create multiple listings without having to launch new products.
By offering attractive bundles to customers, you can:
- Increase the perceived value of your products
- Encourage customers to purchase more items from your store
- Save on Amazon FBA fees, further increasing your profit margins
Just make sure to comply with Amazon’s listing requirements when creating bundled product listings.
Frequently Asked Questions
Selling grocery items on Amazon can be a profitable venture, as the Groceries category has experienced significant growth and Amazon offers a vast customer base. Thus, selling food on Amazon can be profitable.
Unfortunately, it is not possible to sell homemade food on Amazon due to the necessary licenses and separate facility required.
Reselling products on Amazon can be a profitable side hustle or full-time business if you do your research and put the time in. With the right approach, there’s no reason why you can’t make money at it.
Yes, it is legal to resell Amazon products as long as you follow the company’s guidelines. You can find items to resell on Amazon from many different sources.
The ungating process for selling groceries on Amazon involves providing proof of business, tax info and product labels in order to be approved.
Once approved, sellers can list their products and start selling on Amazon. They will also have access to Amazon’s marketing tools and services to help them reach more customers.
Sellers should also be aware of this.
Summary
Selling groceries on Amazon presents a unique and profitable opportunity for sellers who are willing to invest time and effort into understanding the platform’s requirements and best practices.
By getting ungated in the grocery category, sourcing products effectively, and implementing best practices for product quality, packaging, and replenishment, you can build a thriving grocery business on Amazon.
Now that you have a comprehensive guide to selling groceries on Amazon in 2024, it’s time to take the plunge and start your journey towards success in the online grocery market!
Groceries are one of the best products to sell on Amazon, in my opinion, and with the info I have just shared with you I am confident you can make a real go at this! Happy selling.
