Organics from Amazon – who is the winner?

From the beginning of July, the US American internet retailer Amazon has been operating an online shop in Germany for food and beverages. Included in more than 54,000 articles for sale online are thousands of organic products: dry goods and fresh foods, well known and less known wholefood brands and even the Dennree brand are available via the Amazon portal. The consumer watchdog Stiftung Warentest has concluded that Amazon’s food purchase portal is deficient in a number of ways and is also too expensive. Organic online portals that use Amazon as their platform and Amazon’s direct suppliers are looking back over their very different experience in the first two months.

According to its website, Amazon is selling over 6000 organic products. They are offering organics on a grand scale, including the product ranges of Allos, Bohlsener Mühle, Davert, Herbaria, Lebensbaum, Rapunzel, Voelkel, Zwergenwiese and other brand manufacturers. Also available via Amazon are the online muesli mixer Mymüsli and the Fair Trade company Gepa. Naturkost.com, AmoreBio.de and Natur.com are among the online organic companies supplying a whole host of products and fresh foods – from lettuce to potatoes, yoghurt and cheese, etc. Around 60 partners supply food via the Amazon portal. (Picture: Buying organic food on the internet or in a specialist store – which has a future?)

“We launched our food shop with 35,000 products at the beginning of July, and today we’re already offering more than 54,000 articles,” says Kathrin Schmitz, the PR manager at Amazon, in response to enquiries by Organic-Market .Info. She tells us that they are concentrating on selling products that are hard for customers to find generally or in this variety. On sale are, for example, 6,000 coffees and teas and more than 900 noodle products (50 brands), of which 190 are organic. Their category herbs, spices and fix products consists of more than 5,000 items, ranging from table salt to Fleur de Sel and Himalayan salt. The current 6,000 organic food products come under this general definition of where they are putting the emphasis. Amazon also points out: “In Amazon.de’s own product range we are concentrating on creating an array of non-perishable goods – fresh foods are dispatched exclusively by external suppliers.” (Picture: Amazon, the internet’s retailer No.1, wants to find out if the market is ready for online food)

We have to distinguish between two concepts. On the one hand, there are companies like the online organic portals Naturkost.com, amorebio.de or Natur.com - that use the marketplace concept of Amazon. They appear on the Amazon portal as suppliers, and they deal with customers’orders themselves. On the other hand, there are organic companies like Bohlsener Mühle, Byodo and Herbaria, or firms with an organic product range like Bio-Zentrale, Whole Earth and Gepa, who sell their products to Amazon, which in turn sells them to the end customers. The experience of these companies has so far been very diverse, as have expectations as well.

Natur.com was launched in 2006. The company, located in Inkhofen between Regensburg and Straubing, lists about 2,300 organic and natural cosmetics products that include dry goods, fruit and vegetables, white fresh foods, fine foods, sausage products and wine. The managing director is Werner Klauke, who is very pleased with the way turnover has developed: “We’re recording annual growth of 50 to 60 %.” He is even happier since he responded positively to an enquiry by Amazon and began at the beginning of July to use its web food portal as a platform for his product range. “So far we’ve had a very positive reaction and we’re benefiting from the high level of visits to the mega portal.” In the first two months, Natur.com recorded additional growth of 40 % by virtue of having 1,900 products on Amazon.de. Klauke aims to increase the number of his products on Amazon’s website. He points out that wine in particular is under-represented, and he also says that his company’s presence on Amazon is undoubtedly a boost to the image of his own online portal. (Picture: Natur.com has high expectations of Amazon and plans to expand its product range on its website)

Natur.com buys direct from both brand manufacturers and the wholesalers like Biogarten, Naturkost Erfurt, Ökoring, Pural, Rapunzel.  Klauke explains that the feedback from manufacturers and wholesalers regarding the commitment of Natur.com has been positive. Only with the natural cosmetics manufacturers are there agreements stipulating that their products cannot be sold on the Amazon portal. “Of course, we respect their decision,” says Klauke. Shortly before launching their food portal in early July, Amazon approached the Inkhofen firm to see if they were interested, for the usual commission on goods sold, in a presence on Amazon as the supplier. “We were certainly interested,” explains Klauke. His view of the problems that led to criticism by the Stiftung Warentest and the consumer advice centre, the Hamburg Verbraucherzentrale, are that they are teething troubles that will soon go away. He is confident that selling food on Amazon will be a success.
(Picture: Amazon customers can put together a wish list)

The online portal amorebio.de, based in Ubstadt-Weiher near Bruchsal, is convinced – contrary to the critical comments of BNN – that the organic food trade via the internet is working well. “Buying online is rapidly becoming the norm, and that includes food,” says spokesperson Adriana Zambrano. Amorebio had a small product range on Amazon as far back as the end of 2008 and, since June of this year, it has been increased to practically the company’s total range of 3,700 products. Amorebio, founded in 2001, sets great store by quality, its speciality being fresh products. As the company says, around 150 types of fruit and vegetables are available fresh every day and they reach the customer in chilled condition. “A best seller on Amazon is, for example, a young Söbbeke Gouda,” explains Adriana Zambrano. (Picture: Adriana Zambrano from amorebio.de: good experience of Amazon)

According to Zambrano, feedback has so far been very positive. At the same time, however, the company is not deluded into thinking there will be huge organic hype on Amazon. “We have noticed some growth, but we’re also aware that a large part is down to curiosity and orders only to check us out.” She says that amorebio’s mission is to provide service and that it is indeed her company’s strong point. He explains how it all works: after a customer orders on Amazon, amorebio immediately sends confirmation and a clear statement of the cost of delivery. “Some customers cancel at this point, but we’re confident it will all settle down in due course. We’re convinced that the Amazon portal will raise customer acceptance of organics.” She says that they are in discussion with Amazon regarding the problems (despatch costs). (Picture: Expectations of the Amazon portal should not be too high. Amorebio’s managing directors Gerhard Hamann (on left) and Michael Terneschinko (on right)).

In contrast, Hans-Georg Gack and his son Jan-Christoph are very critical of the Amazon food portal. They have been operating one of the oldest organic online portals, Naturkost.com, since 1994. Like Amorebio, the firm has its headquarters near Bruchsal. They are agreed: “The winner is Amazon.” “Given the low margins in the food trade, there is hardly any return,” explains Jan-Christoph Gack, who is in charge of  Naturkost.com on Amazon. He says the costs are high and the volumes are minimal. According to Gack junior, Amazon takes commission of 15 % from all suppliers using their ‘marketplace’, i.e. companies who put their products on the Amazon portal, but who then have to take charge of operations themselves. He states that in the case of direct sales from its logistics centre Amazon even demands a discount of 25 %. He points out that naturally many companies are hoping the Amazon mega portal means big business for them, but he considers their expectations are unrealistic in view of the commission and the low margins. “We’re not impressed by all the hype. Because our business is running to full capacity, we only posted about a quarter of our product range on the Amazon site to test it,” says Jan-Christoph Gack. He says feedback from all his suppliers, however, has been positive.

In Munich, Basic too is regarding it as an experiment. This company has posted a number of own brands on the Amazon marketplace. The goods are dispatched to customers via Basic’s online shop biowelt.de that was launched in July 2009. As spokesperson Swaantje Katz points out, the online shop is doing better than expected and they are very pleased with it. (Picture: Criticising Amazon: Naturkost.com regards Amazon as a sideline. Basic’s experience with its own online business is positive)

Amazon stocks several thousand dry goods in its own warehouse. The organics include many mueslis and bars from the firms Bohlsener Mühle, Gepa, Seitenbacher or Whole Earth. Amazon itself also sells teas and spices produced by Yogi Tree, Herbaria and Sonnentor. These goods to a value of more than 20 euros are despatched free of charge, whereas products posted by other suppliers (natur.com, Basic’s biowelt.de, amorebio.de, naturkost.co., mymusli.de) are dealt with and despatched by the particular companies, and they have their own delivery charges. Volker Krause from Bohlsener Mühle regards the Amazon portal as one opportunity among many to make organics better known and to raise people’s awareness of organic nutrition in general.  He says they have no great expectations in terms of sales, and they see is as a trial run. Turnover is still vanishingly small, with end prices to customers often at the level of the specialist trade or even higher. Krause rejects the reactions of the BNN associations as precipitous blanket criticism. (Picture: Trial run. Some manufacturers and businesses are trying out the Amazon portal)

Amazon itself sees the whole venture as a success: “We’re very happy with the response of our customers to the launch of our food shop. Of course, there’s still a lot to do and we’re working continuously on improvements, but customer feedback shows us that we’re on the right track,” explains spokesperson Kathrin Schmitz. “Amazon gets a lot of questions about products that customers would like to buy from us and also ideas for services that customers want us to provide.”  Amazon’s reaction to the fault-finding by the Hamburg consumer advice centre and the organization Stiftung Warentest is: “If relevant information and product details on our website are not complete, we work on the problem immediately and add the details – and this includes the comments by the consumer centre in Hamburg regarding the labelling of products.” (Picture: Open to criticism: anyone can judge)

Amazon emphasizes the point that their priority is ensuring that online shopping is a positive experience for customers. This is why the company is continually checking customers on the Amazon platform to evaluate their experience of external suppliers. They do so via direct feedback to customer services and also via the evaluation of sellers on the website. “Amazon’s retail partners have a duty to stick to the company’s marketplace participation conditions, where the standards and their obligations as sellers are defined. If we discover that the conditions are not being complied with or the seller’s performance falls short of the prescribed standards or the participation conditions, we step in immediately.” Naturally, food can be returned if it’s not satisfactory. A final comment: “Our priority is extending the range of what we offer, and that includes organic food. At Amazon.com there are 360,000 articles for sale, so there’s still a lot to do as far as organics are concerned.”