Amazon has had a record year so far in a variety of unexpected places. With clever strategies and long-term investments, Amazon has become a major destination for consumers buying automotive products, furniture and home appliances. Now, Amazon is targeting a very different kind of product: sweets and snacks.

Competing in the sweets and snacks space is a unique challenge because it relies so heavily on impulse buying. But Amazon, never one to shy away from a difficult product group, has a plan: with the new Prime Surprise Sweets program and the use of Alexa to engage the impulse buying crowd, Amazon’s effect on the sweets and snacks industry is quickly being felt. Let’s take a closer look at the eCommerce giant’s performance in this product group.

The NumbersAmazon-sweets-and-snacks-revenue-growth

  • $49 billion: Total 2016 U.S. sweets and snacks sales.
  • $240 million: com 2016 Sweets & Snacks sales.
  • $215 million: com 2017 YTD Sweets & Snacks sales (January-August inclusive).
  • 42%: YoY growth of Sweets & Snacks sales.

In only the first eight months of 2017, Amazon’s sales of Sweets & Snacks have almost reached the total volume of sales in 2016, a YoY growth (comparing the past 52 weeks to the same period in 2015-16) of 42%. Though the biggest subcategories by a significant margin are not surprising – Chocolate Candy, Salty Snacks, and Non-Chocolate Candy – much of the year-to-date growth has been driven by more health-conscious consumers. Dry Fruit Snacks, arguably the healthiest of all subcategories, experienced 75% growth, more than any other subcategory, while the next three top growers are all relatively healthy: Dried Meat Snacks, Snack/Granola Bars, and Crackers. Of the larger volume categories, Salty Snacks grew the most rapidly, leaving sugary treats relatively stagnant by comparison.

Sweets & Snacks: U.S. 2017 YTDAmazon-snacks-data-most-popular-treatsAmazon-top-snacks-categories-data

Amazon-top-selling-sweets-and-snacks-dataSweets & Snacks: International

Conversely, Sweets & Snacks sales in Europe are still overwhelmingly driven by sugary treats, with the Sweets subcategory dominating in the U.K. and Chocolate leading in both Germany and France. Quite unlike the U.S., the majority of top-selling items are sweets and chocolates, making up at least 8 of the top 10 items in all three of these countries.


Amazon’s Sweets & Snacks Strategy

Amazon’s burgeoning success in the Sweets & Snacks product group springs from four main drivers: Private Brands, Prime Surprise Sweets, Alexa, and Candy Holidays. Let’s look at how each of these factors into Amazon’s strategy.

  • Private Brands: Happy Belly & Wickedly Prime

Currently, Amazon has two private brands competing in the snack space: Happy Belly and Wickedly Prime. The latter, to smaller effect, ranks 65th in the product group with $800,000 YTD sales this year. Half of those sales are popcorn snack bags, generating a respectable 25% of the sales of the top incumbent SkinnyPop (with $1.6M YTD sales).

Happy Belly, on the other hand, ranks as the 4th-best selling 1P brand in the Snacks category, generating $3.5M in YTD in the Snack Nuts subcategory. Though Happy Belly’s biggest 1P competitor is Planters with $6.5 in Snack Nuts sales YTD, Happy Belly’s flagship Trail Mix products have no direct 1P competition on Amazon. Category leaders Kirkland Signature and Archer Farms are both only available through 3rd-party sellers, leaving a vacuum for Happy Belly that may be responsible for the private brand’s success.

  • Launching “Prime Surprise Sweets”

Amazon’s recent pilot program Prime Surprise Sweets is something new for the platform. In brief, it’s a button on an Amazon Prime member’s dashboard (purchasable for $4.99) which, when clicked, automatically orders an $18 box of assorted artisanal sweets. The Dash button, which requires a 1-click ordering address, is designed to promote Amazon’s assortment of specialty chocolates, sweets and baked goods, delivering a “surprise” package of premium handmade treats, many of which can’t be bought through Amazon in any other way.

So far, the program has already brought in about $1.6M in sales and is rapidly growing: the button only sold about $65,000 in January but grew to five times that size by July. The program has generated $700,000 YTD sales of Artisanal Baked Goods, $300,000 of Artisanal Chocolates and $130,000 Artisanal Caramels as well as lesser amounts of several other subcategories, though since Prime members don’t actually choose the items included in the box, its contents may not accurately reflect consumer demand.

  • Impulse Buying with Alexa

Amazon has invested heavily in automation and today, thanks to Alexa, there is no need to click a button to place an order and have it delivered directly to your home. This innovation accelerates Amazon’s ability to compete in a wider range of product groups and subcategories. Specifically, it eliminates the bane of online ordering: the ability of the consumer to reconsider. Alexa gives Amazon access to a whole new level of impulse buying. Amazon Echo owners can now shout out the candy or treat they’re craving at any given time and the very next moment Alexa will have the order placed for them.

  • Candy Holidays Drive Chocolate SalesAmazon-Chocolate-revenue-historical-data

All this talk about impulse buying of candy would be disingenuous without recognizing that the three biggest chocolate-buying days of the year are not impulse-driven at all: Valentine’s Day, Easter, and Halloween. As might be guessed, sales of Chocolate Candy see an annual spike around each of these dates, with Valentine’s Day driving an 85% increase in 2015 and 2016, which then climbed to a 135% lift in 2017. This Halloween may be even higher since last year it drove a 3-week long sales lift of 120%.

Counterintuitively, Easter has yielded very little change in the past, generating a negligible lift in chocolate sales prior to the holiday. Instead, we’ve seen a sudden spike in sales during the few weeks after Easter driven by a high volume of lightning deals discounting chocolate items by 30-80%. This is most likely due to brands overstocking on Easter candy and later trying to clear their inventory; adding credence to this interpretation is that in 2017, Amazon bucked the trend with an unprecedented 50% spike in candy sales before Easter and, subsequently, the post-holiday deal-driven spike disappeared.

Key Takeaways

  • Amazon shoppers in the U.S. are buying more snacks year after year, but their preferences are shifting towards healthier, non-sugary and organic snacks.
  • Amazon’s private brands (which are still limited in this space) are competing more effectively in areas where there are less first-party competitors, such as Happy Belly Trail Mix.
  • Prime Surprise Sweets is a new and unique way for Amazon to market specific product categories, generate brand awareness for artisans and other 1P sellers, and increase their portfolio of premium and artisanal products.
  • As Alexa grows in popularity, voice-activated purchases of snack foods and other consumables have the potential for major growth.
  • Year after year, Amazon has been improving holiday candy sales (including Valentine’s Day, Easter, Halloween and Christmas), both in volume and in duration of lift.

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