Why Amazon is buying countertop paper towels for $25 a box
New York, NY–(BUSINESS WIRE)–Amazon.com, Inc. (NASDAQ: AMZN) today announced it is acquiring two dozen giant paper towels brands from paper towel companies, including Giant Paper, from an agreement to buy up to 10,000 tons of paper towels per year for $5.05 per ton.
These paper towels are sold in grocery stores, convenience stores, home improvement stores, and other retailers.
Amazon will retain ownership of the paper towels as part of the purchase and will use the proceeds to help offset its costs for inventory, distribution, and marketing.
In addition, the company will provide Amazon with $25 per ton of countertop papers, which will be distributed to customers through Amazon Prime, its digital subscription service.
Amazon plans to offer all the paper towel brands as part for Prime members for two years.
“The Amazon purchase represents another step forward in the company’s long-term strategy to transform paper towels from a commodity to a more cost-effective, environmentally friendly, and more sustainable product,” said Jeff Bezos, founder and CEO of Amazon.
“We are committed to helping customers stay healthy, and the purchase of these brands will help to further improve the lives of customers, workers, and communities around the world.”
These paper towel brand purchases will be made on an annual basis through Amazon.com.
In October, Amazon announced it will be using some of its Paperless savings on new products in the grocery and retail space.
The company also announced the purchase was supported by a $30 million grant from the National Science Foundation.
Amazon said it will use some of the proceeds from the sale to support research in areas including biofuels, energy, and food waste.
The deal will also help Amazon’s global expansion.
“I think these brands are a perfect complement to our Amazon Prime members,” said Eric Schildkraut, vice president of global marketing and sales for Giant Paper.
“It gives Amazon a great opportunity to take more of a leadership role in paper towels in the next two years, and it will help us expand the brand and expand into new markets.”
The Amazon acquisition follows another paper towel purchase by the company in November, when it bought the rights to make paper towels available for the first time to retailers through Amazon’s Prime Now program.
Amazon Prime now includes more than 1.3 million Prime members worldwide.
More than 1 million people use Prime Now each month to buy products, including paper towels and electronics, and Amazon’s free 2-day shipping on products.
Amazon has also recently expanded its delivery services in the US.
In December, Amazon delivered more than 2 million packages to more than 400,000 U.S. households.
The announcement of Amazon’s paper towels purchase is part of Amazon Prime’s commitment to providing an efficient, convenient, and convenient delivery experience for all of its customers.
“Our commitment to delivering on time, with the best possible service, and with products that last is what we call the ‘Amazon Way,'” said Eric Schmidt, chairman and CEO, Amazon.
The Amazon paper towels deal is expected to close in the fourth quarter of 2017.
In September, Amazon’s annual profit dropped to $1.08 billion, down 6 percent from a year earlier.
Analysts expect Amazon to post $4.6 billion in revenue in 2017, down 18 percent from $4 billion in 2016.
For more information on the paper-tooth acquisition, please visit: www.amazon.com/paper-tooths-deal-amazon-amazon.html.
For additional information, please contact the Amazon Group at 1-800-923-3870.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about future economic conditions, expected demand for paper towels at the time of sale, and future earnings and operating results.
This release may contain forward- looking statements regarding Amazon’s future operations, the timing and extent of the acquisition of Giant Paper or the Amazon paper towel acquisition.
Such forward- thinking statements are based on certain assumptions and include, among others, expectations for future business, product and technology trends, the impact of the Amazon purchase on Giant Paper and the Amazon Prime program, and information regarding Amazon and the Giant Paper company’s financial condition.
The views expressed in this release are solely those of the company, and do not necessarily represent those of its management.