How Amazon uses free product samples to catch more customers

Online retailer Amazon started to test sending free product samples to customers. At the moment, the program is limited to the United States and it is not clear if and when a similar service will start in other countries. Nevertheless, international retailers should take a closer look at the program.

The focus lies on consumer products like pet food, grocery, cosmetics, health and household. The first organic products are already listed.

Free product sampling as an alternative to classic advertising

Amazon uses algorithms and its large amount of customer data to detect receptive customers for certain samples. „Targeted Product Sampling is an Amazon advertising product that leverages Amazon’s customer data to allow brands to put their products in the hands of the right customers to drive product awareness and conversion“, the retailer explained in a job-offer addressing Senior Software Engineers.

Companies wanting their products to be sent as a sample have to pay for it. The idea is to reduce waste and reach a more focused target group through more than advertising. This should make the offer attractive for producers: „We are reinventing how customers discover and try new products on Amazon through various formats of sampling“, Amazon further wrote in the job-offer.

New niche as a threat for competitors and producers

The strategy offers Amazon a possibility to harm competing companies like Google and Facebook in the battle for marketing-budgets on a field where these firms can't react. But it could also be an attack against producers. Using samples, Amazon could target customers based on their data to promote their own-labeled products. Especially in the organic sector this would be a good chance to send free samples of Whole-Foods-Market-products to customers preferring an organic lifestyle and to introduce and strengthen the brand. On the contrary, producers are enforced to spend money on the platform in order to keep up the competition with the online service provider.

Elke Röder, managing director of the German inter-trade organization BNN, keeps calm: „Especially in sectors like cosmetics, cleaning agents or free-from-products there are often very individual questions, which often can't be treated adequate in an online-product-description.“ But as financial analysts consider the strategy of Amazon as promising, retailers shouldn't underestimate it.

In the past, Amazon already experimented with different approaches to free samples. For example, prime-service-customers had the possibility to buy boxes full of samples. In return, they got a credit for a later purchase.

Introduction of an own organic brand and expansion of the US Whole Foods branch network

During the last months the online-retailer enforced its plans to roll out its own consumer-products. Under its own organic brand Whole Foods Market, Amazon UK offers around 50 products on its electronic shelf as well as many more in its stationary stores. In Germany, too, the internet giant is now offering its first Whole Foods Market products online, but so far there are only 14 bags with nuts, seeds, raisins and cereals.

However, besides filling up the European online shelves with their own products, a possible further step into the direction of Amazon’s continuous growth are the alleged plans to open more US-supermarkets under the Whole Foods brand.

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