July 1, 2021

How has Amazon influenced the coffee industry?

There is no doubt that Amazon has had a massive impact on global consumer behaviour. In 2019, an average of 4,000 items were sold every single minute on the ecommerce giant’s US site alone; its revenue in 2020 was a staggering US $386 billion.

But what about coffee?

Just as it is in other industries, Amazon is quickly becoming a key market for coffee businesses. It represents such a massive opportunity for coffee brands that in 2018, the National Coffee Association (NCA) even hosted an Amazon-specific webinar entitled Establish, Manage, and Grow Your Coffee Business on Amazon.

By creating such a competitive market for online coffee businesses, Amazon arguably has an impact on the behaviour of coffee consumers around the world. To learn more, I spoke to Ana Ozuna of Tazamagna, and Sabrina Scott-Pappas of es beverage, both of whom have industry experience selling or trying to sell coffee on Amazon. Read on to find out what they told me.

You may also like our guide to selling coffee online

The consumer demand for convenience

Convenience has become one of the most important factors in the modern shopping experience, and this includes fast shipping options. Amazon has been a clear market leader in this regard for years – in some parts of the world, their Prime service currently offers same-day or even one-hour delivery options.

This growing demand for convenience is reflected in the coffee industry, too. In 2018, James Hoffman uploaded a video on how the coffee and food-to-go chain Pret A Manger has a “publicly stated goal of serving customers within 60 seconds”. 

These fast service times are meeting the demand for greater convenience in hospitality services. This in turn creates the expectation of convenient service among consumers who use them, which keeps the cycle going.

Amazon is also a key market for roasters to be aware of, even if they’re not using it to ship coffee. For most roasters, shipping coffee to consumers typically takes anywhere from a day or two to over a week, depending on the distance to the delivery location. 

While this timeframe has a varying effect on freshness, Amazon almost always provides a quicker option. Their fulfilment services can allow consumers to receive coffee on a much quicker timeframe, thanks to their direct-to-consumer shipping network, which operates at a colossal scale.

Customers can even purchase beans in a more convenient way using Amazon’s Alexa platform – a virtual assistant developed to create a hands-free shopping experience. Customers simply activate Alexa with a keyword and state the product they want to order.

Although it does face competition from other “virtual assistants” – such as Google Assistant and Apple’s Siri – Alexa remains the market leader. Q4 2020 figures published by Strategy Analytics show that Amazon continues to lead the pack in “smart speaker” sales, with Google coming second.

Sabrina Scott-Pappas is the founder of es beverage, a hot and cold beverage manufacturer, wholesaler, and retailer based in Atlanta, Georgia. es sells its single-serve writer’s fuel product on Amazon to customers based in the US.

“Voice activation can really be a revolutionary way to shop,” she explains. “It leads to effortless purchases that one can make anywhere, at any time.”

Amazon has entered the market

Amazon hasn’t just influenced the coffee sector using its platform, however – it is now also a direct competitor. In the mid-2010s, it launched a number of “own-label” grocery brands, including Happy Belly and Solimo.

This was likely a response to the huge success it saw with other brands selling their products through the platform. In 2018, the three highest-selling coffee companies on Amazon were Starbucks (US $16.8 million), Keurig Dr. Pepper (US $12.6 million), and Nestlé (US $11.2 million)

Even other non-multinational coffee companies have seen some success: high-caffeine brand Death Wish Coffee generated some 50% of its 2017 sales through the platform. 

This success shows no signs of slowing down, either. Since 2018, “food and beverage” has been Amazon’s fastest-growing category, and coffee remains the most popular subsection. 

Altogether, this seems to have created the perfect opportunity for Amazon to enter the market with its own-label brands and undercut competitors. It has already used the platform to generate a huge amount of consumer demand.

Since then, Amazon has capitalised on this demand with an incredibly aggressive product strategy. Between April and September 2018, The Grocer estimates that Amazon launched more than 30 own-label coffee lines in the UK alone, nine of which were pod products. 

Sabrina says: “On one hand, Amazon has become an essential facilitator and has increasingly become the go-to marketplace for consumers online.

“However, on the other hand, Amazon has also maximised [its] opportunities by developing house brands.”

The diversity among its house brands is also a key part of Amazon’s sales strategy. Happy Belly was first launched in 2016 as an own-label brand. The range includes several single-serve capsules, ground, and whole bean coffee options.

Happy Belly products were initially only available to Prime customers: creating an “exclusive” feel to the brand. They were later opened up to everyone using the platform.

Solimo pods, however, are Keurig and Nespresso-compatible, and cover a range of roast profiles, blends, origins, and flavoured coffees. These are targeted at customers who already have a pod machine, trying to undercut competitors by offering cheaper and more convenient alternatives.

Finally, AmazonFresh coffee shifts the focus more towards discerning coffee consumers. Under this umbrella, the brand provides a range of single origin coffees across different roast profiles, which are often more expensive than the Happy Belly and Solimo range. 

Amazon also has a significant competitive edge when marketing their own-label coffee products. An Amazon brand will generally feature on the first page when you search “coffee”, if not near the top of the rankings. 

This has understandably led to success. In January 2019, Solimo capsules had a 4.1% market share on Amazon, and was ranked sixth in the “coffee pods” category against brand giants such as Nespresso and Keurig K-Cups – despite having launched just a few years prior.

Is Amazon a good opportunity for coffee brands?

Estimates from 2020 claim that there are more than 150 million Amazon Prime members around the world, meaning that for those who can break in, Amazon is an unbelievable opportunity. However, it remains one of the most competitive markets in major coffee consuming countries around the world. 

There is a distinct competitive advantage for those who come “first” on product listings. Under the coffee category, there are currently over 400 pages. If coffee businesses want to grow their online revenue through Amazon, appearing in the first few is essential.

Ana Ozuna is the Commercial Director of Tazamagna, a family-owned Colombian coffee business. She has previously tried to take her brand to Amazon. She says that while there is huge potential to access a massive base of coffee consumers if you “crack” it, marketing is a major part of your success.

“Marketing expenditure is critical in order to be seen,” she tells me. “You can have all the resources in production and logistics set up perfectly, but if you don’t have the marketing resources to be competitive on Amazon, then it’s not worth it.”

The integrated Amazon fulfilment & logistics system means customers can receive orders in just a day or two in some places. This benefits brands as much as it does consumers.

“Strong logistics infrastructure and delivery [systems are] trustworthy and [give] the seller peace of mind knowing their products will arrive timely,” Ana explains.

“This competitive advantage could also alleviate logistical barriers for brands roasting at origin, for instance.”

These fast-moving shipping options provide a key opportunity for Amazon sellers. Freshness is a major priority among coffee consumers, and faster delivery services can benefit roasters who might be that little bit further from their customer base.

Sabrina also says that Amazon’s mobile-friendly app is a great way to circumvent the need to set up your own optimised store or app.

“Mobile-friendly stores and platforms like Amazon have become increasingly important for attracting consumers,” Sabrina adds.

Although a 2019 survey showed that 67% of Amazon’s shoppers prefer using a desktop to complete orders, the demand for mobile-friendly options is still clearly important.

How could Amazon shape the future of the coffee market?

Beyond creating a fiercely competitive market for coffee businesses, Amazon could also potentially cause the coffee industry to evolve in different ways. 

By partnering with specific brands or capitalising on growing trends, it could drive consumer awareness about specialty coffee, for instance.

In fact, this is already happening at some level. In 2016, Amazon partnered with roasting and brewing equipment manufacturer Behmor to create the Behmor Connected Brewer. The SCA-certified home brewer is Alexa-compatible, allowing the user to set brewing parameters within a few seconds. 

The Alexa-integrated Amazon Dash Replenishment service can even ensure the brewer automatically reorders a preferred coffee when stock is running low – providing an all-round convenient experience for home specialty coffee consumers.

Amazon has also played a key role during the pandemic. Throughout stay at home orders and regional lockdowns, home coffee consumption has been on the rise. Earlier this year, the NCA’s 2021 National Coffee Data Trends Report found 85% of US coffee drinkers consume at least one cup at home – an 8% increase since January 2020.

The need for quick and efficient coffee delivery services became incredibly important when cafés and roasters were forced to close their doors. Subscription services also skyrocketed during the pandemic: the number of US roasters offering subscriptions increased by 25%, while subscription sales rose by 109%

Drive-thru and app-based orders have also increased by 30% during the pandemic, indicating consumers gravitating towards convenience – likely an existing trend that was just accelerated by changes in behaviour.

Amazon’s services, like Prime, can meet these consumer demands for speed and convenience, especially while many Covid-19 safety measures still remain in place around the world.

It’s impossible to state that Amazon is either a good thing or a bad thing for the coffee industry. Its competitive market can put smaller roasters at an unfair disadvantage, and allow bigger brands with more marketing expenditure to dominate the platform. 

At the same time, partnerships with brands like Behmor show that its cultural and commercial authority could help to raise awareness and encourage people to drink better, more sustainable coffee.

There’s no simple answer. The only thing we can be sure of is that Amazon will continue to be relevant in coffee ecommerce for years to come – at the very least.

Enjoyed this? Then read our article on the rise of coffee subscription services.

Photo credits: es beverage, Tazamagna, Nicole Motteux

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