Assessing the impact of Amazon policy changes on pet brands

If you’re selling products on Amazon, chances are you’ve heard about Amazon’s recent consumables bundling policy change in the US. But what you probably haven’t heard is how it’s going to affect your business on Amazon.

An end to mix and match

As the retail giant is rumored to also be lining up similar changes in European markets, let’s examine the commercial implications of this change for pet brands selling on Amazon.

Gone are the days when rogue third-party (3P) sellers could create their own variety packs mixing different brands of pet food, accessories and treats.

Amazon’s bundle policy update in the US, announced in October 2024, effectively bans such practices.

Only manufacturing brands will be able to create bundles in the future, and all products in a bundle must be from a single brand owner.

For independent sellers who have long relied on creative bundling strategies to meet consumer demand, this marks the end of their free rein on Amazon.

Advantages for brand manufacturers

This policy change addresses some of the long-standing concerns of brand owners in the pet industry.

With this change comes better control over the presentation of their products on Amazon’s virtual shelves. It will maintain the integrity they’ve worked hard to build by ensuring that their premium dog food, for example, isn’t bundled with lower-quality treats from other brands.

The pricing landscape is likely to change too. Without unauthorized bundles flooding Amazon’s marketplace, manufacturers will be able to better uphold their pricing strategies.

More importantly, data from their own controlled bundle offerings can give them direct insight into consumer preferences.

Market restructuring implications

Major pet food manufacturers are already positioning themselves to capitalize on this change.

Companies that previously powerlessly watched their products appear in unauthorized variety packs can now develop their own official combinations, ensuring quality control while meeting consumer demand.

For retailers and resellers, the story is more complicated. Those who built their business models around creative bundling must now pivot quickly. European vendors will likely be affected next.

With that prospect on the horizon, many resellers are already starting to liquidate non-compliant inventory while developing new strategies to sustain their business.

As with any policy shift, the changes to Amazon’s bundling policy not only pose challenges, but also create new opportunities. This is a chance for manufacturers to start developing comprehensive bundling strategies that align with consumer preferences while investing in direct-to-consumer e-commerce packaging capabilities.

Developing winning strategies

This isn’t just about compliance – it’s an opportunity to ‘premiumize’ their offerings and reshape how pet owners purchase multiple products.

Effectively, it shows brands a way out from the constant net pure profit margin (Net PPM or ‘procurement margin’) pressure amid Amazon’s low average selling price (ASP) strategy in consumer goods categories.

Resellers, on the other hand, will need to rethink their value proposition. Instead of competing through unauthorized bundles, successful 3P sellers should focus on building stronger relationships with manufacturer brands to develop authorized bundling programs.

This can lead to attractive opportunities for first-party (1P) brands to make ranging decisions in light of more difficult annual trade negotiations – brands might choose to remove unprofitable 1P selection and move it to 3P, or they might use 3P sellers as co-packers for creative bundling opportunities such as advent calendars or brand partnerships.