Big Brands on Edge in the Amazon Cereal Category
John Rode
on Mar 15 2019

Watch out big brands, you're teetering on the edge! We dove into the cereal category on Amazon and uncovered an interesting dynamic. Three of the largest brands are dancing between supply chain success and underperformance. While at the same time the bigger brands are dominating cereal marketing on Amazon, which is pushing down the majority of brands. Standing apart from all of this is an independent competitor who has achieved operational nirvana, while maintaining a modest marketing presence.  

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This BrandIQ Quadrant for cereals benchmarks brand performance by the critical disciplines of supply chain operations and marketing. Who is best able to both drive and fulfill demand on Amazon in this category? The metric that underpins marketing is Share of Voice (how often your brand appears in organic or paid search results), and for operations it's revenue leakage (how well are you able to avoid losing sales because shoppers are unable to buy your product because it's unavailable, lost buy box to 3Ps, etc.). Given Amazon's ever-increasing complexity and speed, mastering both is not simple.    

 

High IQ Brands

Brands in the High IQ quadrant demonstrate both marketing and operational prowess. They get their brand in front of buyers and ensure they're positioned to get the sale. Only two brands qualify for the honor of being a High IQ Brand in Amazon's cereal category -- Kellogg's and Pepsico Quaker Oats). However, while Pepsi is relatively safe with strong marketing and operations, Kellogg's is dangerously close to stepping into the Large Leakers quadrant. With such a high share of voice it would be a shame to see Kellogg's dominant position deteriorate. Most likely, if this situation isn't addressed we'll see Kellogg's slide down the marketing scale. Pepsico's position right in the middle of the High IQ quadrant is similar to that of Earth's Best (Hain Celestial) and Happy Baby (Danone) in Baby Food.

 

Niche Performers

General Mills is definitely dancing on a fine line due to its loss of revenue to 3P sellers  combined with some product availability issues. Nothing terrible...but also not stellar. We gave them the benefit of the doubt by including them as a Niche performer. We really like what we see from Nature's Path and Kind in terms of keeping the buy box. And kudos to Nature's Path on getting the top score in the whole quadrant for product availability! Their performance reminds us of how well Plum Organics (Campbell's Soup) performs in the baby food category. If Kind is able to clear up its product availability issues it will be nipping at the heels of Nature's Path. No brands in this quadrant are making aggressive marketing moves. General Mills is putting a bit more spend out there, but nothing over-the-top by any means.

 

Laggards

All brands in the Laggards quadrant appear sporadically in paid and organic search results. Of the four brands, only Julian Bakery appeared to be putting a little paid marketing muscle behind its brands, but it also appeared to be struggling the most with product availability issues. That's not a great combination. Post, Whole Foods, and Red Mill seem to suffer about equally from losing the buy box to 3P sellers, and just generally not having their product available to buy when shoppers click through their search result listing. The advice here is almost always to get your operational house in order before you do anything else. 

 
Explore Other BrandIQ Quadrants 
brandiq_quadrant_babyfood brandiq_quadrant_snack_food_bars brandiq_quadrant_dogtoys_amazon
 
Methodology

Our data was drawn from an automated, daily analysis of top keywords in the Amazon cereal category over a one-year period. Our method focused on 1P brands and their associated SKUs. Marketing performance was determined by analyzing Share of Voice which essentially divides how many times a brand appears in search results, by the total available slots in the search results. Our system looked at both organic and paid ads for the top keywords discovered for the cereal category on Amazon. Our system focused on page 1 search results and the product page for each SKU. Each appearance of the brand in organic search and paid ad slots was given equal weighting. Revenue Leakage was determined by an algorithm that analyzes inventory availability of the SKUs on the product page and translates that into estimated revenue missed for each brand due to things like a SKU being Currently Unavailable, Inventory Encumbrance, Item Under Review, a 3P seller taking the buy box, etc. 

 

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