Savvy parents looking for bargains on diapers have undoubtedly heard of Amazon Mom. Unlike its subscription-based Amazon Prime cousin which offers free 2-day shipping for a $79 annual fee, Amazon Mom is a free program designed with parents of young children in mind. Until this past Tuesday, Amazon “Moms” received 15% discounts on most diapers and wipes on top of the 15% discount and free shipping available via Amazon’s Subscribe and Save auto-replenishment program. Amazon also threw in a year of Amazon Prime for new Amazon Moms.
With Amazon Mom, the world’s leading online retailer is aiming straight at its rivals’ jugulars by offering parents steep discounts on an often purchased item. When you factor in the free shipping and lack of any sales taxes, parents can save $10-15 off the price of a single package of diapers. Over the course of the 2-3 years kids are in diapers, the savings are very real for families. By hooking new parents on the concept of online ordering of this indispensible product, Amazon is likely to keep many of them ordering additional household items as their children grow. Amazon is squarely aiming for a large share of households’ monthly spend on groceries and other household items, an area long dominated by grocery stores and mass merchants like Walmart and Target. Amazon’s multi-pronged effort to win in baby care has resulted in it capturing a huge share of online diaper sales.
Not surprisingly, interest in Amazon Mom has been high. Over the past year, an average of 130,000 “Moms” have visited Amazon.com each month to learn about the program, and nearly 60,000 per month have registered.
Of course heavy discounting comes at a price both on the bottom line, and with respect to supplier relationships. Recently Amazon closed Amazon Mom to new members (at least temporary one would imagine) and angered many existing members by reducing the Subscribe and Save discount on diapers to 5% (total discount is now maxed at 20% on diapers and wipes). In addition, the free trial Amazon Prime trial period was limited to just 3 months.
As Amazon trims benefits and plots its next moves, rivals who have watched in horror as Amazon has grabbed share appear to finally be devising plans to counter Amazon gains. Just last week Target reached out to some of its suppliers to reportedly gauge interest in, among other things, the creation of a membership or subscription-based online program similar to Subscribe and Save, offering in particular discounts on diaper purchases.
Even though the perks Amazon offers to diaper shoppers might not be quite as good as they once were, there are discounts-a-plenty available online for parents willing to rethink the traditional way in which diapers are purchased. The potential entry of Target in the subscription business (and if so, surely Walmart to follow) is great news for parents.
As VP of Retail and Consumer Products at Compete, Matt Pace is responsible for leading a team of client services professionals who deliver digital intelligence and insights to clients in the retail and consumer packaged good industries. Before Matt joined the Compete Team he was a CPA and senior auditor with Deloitte & Touche. Follow Matt on Twitter @mattpace.