Strauss Group Ltd. (TASE:STRS) has begun selling products on Amazon through Sabra, its arm for activity in the US, sources inform "Globes." In recent months, Sabra products have gone on sale in the US on major retail food websites in the US in recent months, and it was only a matter of time until the products appeared on Amazon.com. Sabra, a part of the global dips and spreads arm of Strauss and Pepsico, is active in the US and Canada, while fellow subsidiary Obela is active in Mexico and Australia, and recently began activity in Europe. The only salads to appear on Amazon so far are Sabra's hummus salads, but greater variety is expected in the future.
This measure is part of efforts by Sabra's sales division to learn how to present the company's products on Amazon. Up until recently, Israeli products were sold only sporadically on the shelves of major ecommerce companies through local wholesalers seeking to offer products connected to Israel for people living in the US. The sales were on a small scale, without direct sales by the food suppliers.
Sources also inform "Globes" that Strauss Group's management is likely to visit Amazon's global headquarters in Seattle during February in order to consolidate cooperation between the two companies. During the week-long visit, eight Strauss executives will meet with Amazon representatives for learning purposes and in order to strengthen the connections between them. Among other things, they will view Amazon's new format - Amazon Go. Strauss wants to study future retail trade, how business is conducted, and the gaps and challenges.
Sabra is the largest chilled dips and spreads company in the US, with a 24.4% market share in monetary terms at the end of September 2017. Strauss, controlled by the Strauss family, is divided into four sectors: Strauss Israel, Strauss Coffee (Israel and international), international dips and spreads business (Sabra and Obela), and activity in the water sector (Tami4 in Israel and water filters activity in China).
In contrast to most of the group's activities, Sabra's reported poor results in the third quarter of 2017, with revenue down 9% to NIS 337 million and operating profit dropping 76% to NIS 7 million. The company's reverse was the result of a voluntary recall a year ago for its leading hummus products.
Sabra's current online sales, including sales on Amazon, are still non-substantial for a group on the scale of Strauss, but the group apparently sees growth potential in the new platform, and is planning a close study of the online food market in the US in order to penetrate it with additional products.
Simultaneously with its consideration of entering distribution in Israel, Amazon is currently working on a far more significant growth engine: Amazon Go, a supermarket with no checkout counters opened to the general public last week. The store, located in Seattle, where the company's main offices are, uses computer vision technology to monitor shoppers and charge them for the products they select, thereby rendering checkout counters unnecessary.
Beyond this intriguing gimmick, the technology enables Amazon to obtain what it needs more than anything else - information relevant to each consumer's detailed consumption habits. The new store actually constitutes a type of prolonged experiment that allows Amazon to examine the conscious and subconscious decisions of consumers when entering a supermarket, such as how much time they held the product, what other products are regularly associated with it, and what alternatives were considered before the product was selected.
Amazon's interest in the food sector can be seen in several theaters. Last June, Amazon shook the US retail sector by reporting the acquisition of the Whole Foods Market chain for $13.7 billion, thereby instantly increasing the number of its physical stores by 470. Amazon also operates AmazonFresh, a service that makes possible delivery of fresh fruits and vegetables to regular subscribers in several US cities. Delivery of food products to customers is more difficult than delivery of the other products that Amazon distributes, because it requires a refrigeration chain.
Amazon's interest in Israeli companies is not confined to online retailing; it also includes its Amazon Web Services (AWS) cloud computing services, which works with Israeli concerns on technological aspects. The retailers and manufacturers, who realize that they have to make a big step forward in technology, are considering the user of the AWS infrastructure, thereby opening the door for the interface with it. In the framework of these services, Amazon hopes to also offer its data management services to local companies.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 29, 2018
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