Amazon Briefing: Week of June 27th

Prices falling as Amazon and suppliers try to sell-through inventory.

Amazon Briefing: Week of June 27th

Exec Summary

Prices of top-selling consumer goods on Amazon fell -1.06% in the US last week while demand increased +2.67% . We're observing US consumers cutting back on discretionary items which has led to excess inventory in some segments, after weeks of shoppers absorbing higher prices.

Prices

Lower prices were observed last week in the Beauty, Health, Pet, and Personal Care categories due to an increase in discounts. Meanwhile, the Baby category continues to see higher prices driven by a shortage in baby formula. Zooming out, prices remain elevated across categories compared to historical levels.

Demand

Demand was up across most categories last week, but some of this was driven by promos in the Beauty category trying to sell-through excess inventory. We also observed weakness in discretionary segments like Makeup and OTC Medications, which includes vitamins and supplements. This could be a sign that consumers are pulling back on overall spending, however demand remains relatively strong for non-discretionary categories like Laundry and Skin Care.

Category Insights

Baby: While consumers are beginning to shift their shopping preferences to lower-priced alternatives in most categories, they don't have the same optionality in the Baby category as a formula shortage continues to limit supply. Prices increased +3.78% last week in Amazon's Baby category, following a +4.59% increase the week prior. The Baby Food segment is driving most of the price increase, with those prices up +9.58% last week. As you can see in the chart below, demand was relatively flat last week.

Beauty: Demand for beauty products was up +9.24% last week on Amazon, more than any other CPG category, driven by aggressive promotions by large brands including Maybelline and Neutrogena (makeup remover). Inventory appears very high in the Beauty category at the moment, so the aggressive discounts may actually be Amazon and/or suppliers trying to reduce excess inventory. If inflation persists, the Makeup category could be hit hard if consumers view it as a discretionary purchase.

Grocery: Prices were flat week-over-week in Amazon's Grocery category last week, but demand increased by +1.98%. Demand is stronger in the Candy segment than other parts of the category, which is normal for summer months. Inventory seems high -- but not excessive -- in the Grocery category, and we're not seeing the same level of discounting that we're observing in other categories.

Health: Both prices and demand declined in Amazon's Health category last week, driven by the OTC Medications segment which includes vitamins and supplements. When prices and demand decline synchronously it implies lower overall demand. This behavior is normal when consumers are pulling back on spending, and it typically affects discretionary goods first. By contrast, demand is holding up nicely in non-discretionary segments such as Oral Care.

Household: Prices in the Household category were relatively flat week-over-week following +2.51% higher prices the week prior. We saw higher prices in the Laundry segment cancelled out by lower prices in the Cleaning segment. Meanwhile, demand has remained strong across the entire category with back-to-back weekly growth in unit sales.

Personal Care: Similar to the Household category, we observed back-to-back weeks of growing demand in the Personal Care category on Amazon. Most of the demand was driven by the Skin Care segment, and specifically sun protection products as much of the US has been experiencing record-high temperatures this summer.

Pet: Demand in the Pet category surged on Amazon by +6.55% last week driven by prices declining by -2.67%. The price decline was only a slight reprieve from the previous week's prices which were up +11.54% compared to the first week of June. Within the Dog Food segment, we're seeing consumers shift their spending away from premium offerings like Hill's Science Diet to lower-priced alternatives offered by mass market brands like Blue Buffalo.


Methodology

Hibben monitors prices and demand on Amazon's US site by tracking a basket of 3,500 top-selling CPG items each week. The basket tracks whichever items are best-selling that week, allowing us to interpret consumer behavior across categories, such as whether shoppers are shifting spending to lower-priced goods. Weekly timeframes are defined by the seven days spanning Saturday-Friday of each week. All figures are estimates as we rely on a combination of data, assumptions, and third-party insights to develop our pricing and demand formulas.