Under Amazon, Small Companies Find It Harder to Promote Products at Whole Foods
Amazon has made a name for itself as a business disruptor with a strategy prizing efficiency above almost all else. The company has worked hard to get products to customers as quickly as possible via its strategically placed global network of fulfillment centers. That approach has made it one of the world’s most valuable companies, but it also comes at a cost, as illustrated by its 2017 purchase of Whole Foods, which has impacted small suppliers that do business with the grocery chain.
Purchasing from small farms, local food distributors, and small-run producers has long been a core strength of the Whole Foods brand. With Amazon’s takeover, some of those local connections are reportedly getting lost, as store sourcing shifts to a more centralized supply system reliant on Amazon’s core tenets—efficiency, keeping costs down, and connecting customers with products quickly.
The situation highlights how the policies of larger corporations can affect small businesses downstream on the supply chain. And the policy shift can be seen not only in the fewer number of local brands on shelves, but even in the smaller aspects of shopping at Whole Foods, like the sample tables set up around stores, dishing out bits of new and local snacks.
I worked as a “brand ambassador”—the industry term for a contractor hired to be the face of a food brand—luring shoppers with free samples from food producers hoping to sell you your next big foodie obsession. As a brand ambassador, I made extra money sharing samples of products from companies such as Noosa Yogurt, Made in Nature, and other local brands that have grown into nationally recognized enterprises.
One of the key aspects of growing a food product business is getting your future customers to taste the product. But sampling at Whole Foods was more than just a way to entice new customers; it was also a sort of audition program for small companies and local businesses aiming to get their products into stores as long-term vendors.
You could find me at Colorado King Soopers stores, Safeways, and Whole Foods locations, asking “Would you like a sample?” I made a point of working for local Colorado companies because it was easier to sell and support local products created by people I’d met, liked, and trusted. In a time when it’s easy to feel disconnected from one another, I enjoyed getting to know and support entrepreneurs who live in my area.
As I was working for an independent marketing company, I noticed changes to the number of shifts available for brand ambassadors during the acquisition and some confusion about how sampling at Whole Foods would work going forward under Amazon. Other brand ambassadors started to tell me they couldn’t sample at Whole Foods. Or that the companies they worked for seemed to be reacting negatively to the new food demonstration rules Amazon had implemented.
Previously, both well-established or up-and-coming brands would schedule a food demonstration through a scheduling app. Businesses would schedule their demo for free and send brand ambassadors into stores hoping they could get as many people as possible to try their product.
While these demonstrations have been a great way for small businesses to connect quickly with a larger retailer, from Amazon’s perspective it was more efficient to work with one demo company, than have numerous companies—like an individual producer, or the marketing firm I worked for—doing the same thing. As reported by The Washington Post earlier this year, “Whole Foods is requiring suppliers to work exclusively with Daymon, a Stamford, Connecticut-based retail strategy firm, and its subsidiary, SAS Retail Services, to schedule in-store tastings, check inventory on shelves and create displays on their behalf.” Whole Foods asked supplier companies to discount merchandise on the wholesale level, to help pay for the program, and began charging companies to come into the stores and demonstrate their own products earlier this year.
Now, vendors can either use a store’s in-house demo team, for as much as $165 per shift, or bring in their own people—though even doing it yourself now requires a fee of up to $30 per hour. This might not seem like a prohibitive cost, but added to the price of promotion over weeks and months, it can make a big difference to companies without large marketing budgets. Smaller vendors now must include the cost of the actual demonstration, cost of product used during the demonstration, and weigh the cost of additional labor when deciding how to market their products.
The owner of one small pasta sauce company in Nevada told The Washington Post that her brand relies on Whole Foods for about half its customers, and policy changes since Amazon purchased the grocer have hit her sales numbers hard. “It feels like that local, personal touch is going away,” she said.
It’s not surprising that some small local suppliers began to look for other ways to market their businesses. I spoke with Carrie Casey of Brightside Creamery, a vegan ice-cream company that likely has a good amount of customer overlap with Whole Foods, to see if she was considering marketing at the grocery retailer. When we met up, she was demoing her ice-cream during Denver Startup Week, a huge local event.
“A lot of small retailers are going direct to the internet to serve their customers,” says Casey. “It’s a lot easier, but you have to keep putting yourself out there so that people know you (and your product) exist.”
She says that as an entrepreneur she must be prepared to adjust changes in the marketplace, including when avenues like Whole Foods become inaccessible or cost-prohibitive.
Casey says she understands that “Amazon is trying to streamline things and make it easier to sell their products.” Small-business owners will just have to respond to that new set of incentives and find innovative ways to get their products out there. Casey, for her part, does several pop-up events where she sets up in a space for a short period of time during a concert or other gathering. She is also looking into marketing at local grocery chains, instead ofWhole Foods.
Ashley Buchart, owner of Limitless Mktg, which markets local products, says these days “You can’t book a demo with a third-party company (like Limitless) on behalf of a brand. Instead, you have to hire Amazon to do the demo and use their people. The marketing effect is different because these individuals aren’t emotionally connected to the brand.”
For Buchart, Whole Foods used to be a place where you could find cool products made by small local companies. She feels that’s no longer the case.
Efficiency is at the heart of the Amazon business model, and it will probably remain that way for years to come. I was frustrated to lose my side-hustle dollars with the decline in demo gigs. And I remain concerned on behalf of smaller companies that just need an opportunity to get in front of the right people to grow their brand.
Fortunately, there is more than one way to market locally made foods. If you’re a food creator hoping to reach the type of shoppers who frequent Whole Foods though, it might be time to change your plan and start thinking outside of the box.