AMAZONFRESH RUMOURED FOR SEPTEMBER LAUNCH IN THE UK

[TrueBlueTerrier]

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Amazon is preparing to launch its online grocery service AmazonFresh in the UK, with plans to go live as soon as September, according to reports.

Disruption

Rumours have been circling for some time that Amazon may be ready to expand AmazonFresh into the UK, following its successful introduction to markets on the US east and west coast. Latest indications are that it could begin operating as soon as September in the UK, according to The Times. This would put Amazon in direct competition with the online grocers in time for Christmas as it looks to grab its share of the UK online grocery market, which IGD estimates is worth £8.9bn in 2015, 5.0% of the overall market.

Third party logistics

Amazon is expected to begin operations in London, operating out of its warehouse in East London, where Amazon Prime Now one-hour delivery services are also based. As in the US the company is likely to expand the business on a market by market basis, targeting densely populated urban centres. Leeds is cited as a likely second hub for the service following on from a London launch.

Amazon Logistics and third party distribution services are most likely to be used to deliver AmazonFresh orders, in a departure from the UK standard of retailers using their own chilled vans. This indicates that the company is looking to apply learnings from its US business to keep costs in check. Amazon has experimented with this model in San Francisco, using the US Postal Service to deliver smaller orders. Packaging will be designed to keep items cool.

Customer expectations

In the US AmazonFresh has introduced a number of new innovations that could be replicated in the UK. These include same-day delivery, early morning unattended doorstep deliveries, the distribution of non-food items alongside grocery and the addition of third party items from local restaurants and delis. Many of these are appealing to shoppers from a convenience perspective and could put pressure on UK grocers to respond.

US AmazonFresh subscribers also have access to Amazon Dash technology, allowing items to be scanned and autoreplenished, making the shopping experience faster and simpler.

Loyalty and awareness will be key to success

In order to take advantage of AmazonFresh, customers will need to sign up to become Amazon Prime members. Amazon’s Prime Day to celebrate its 20th anniversary this week was designed to boost global membership of this service, but the fact remains that there are many more Amazon Prime members in the US than in other geographies. Selling its subscription model will be a key objective for the service to be successful, which may be a challenge in a market where customers regularly have access to free click and collect and delivery slots from the major grocers priced as low as £1.

IGD’s ShopperVista Channel Focus report The Amazon Grocery Opportunity in 2015 found that currently 1 in 3 online grocery shoppers claim to have bought a grocery product from amazon.co.uk in the last month, with younger, working families based in London being the most likely to do so. Only 24% of shoppers felt that they were fully aware of the full range of FMCG products available on Amazon. Meanwhile 35% of online shoppers claimed they “would consider buying fresh food” from Amazon if the service was available.

Implications

AmazonFresh launching in the UK is likely to add pressure to an already highly competitive market, in which the biggest share of revenue growth for many grocers is coming from the online channel and where profitability is already a hot topic. We can expect to see competitors responding to Amazon's bid and working to differentiate their propositions. Strong marketing campaigns from Amazon will be needed to sell the service to shoppers.

Meanwhile for suppliers AmazonFresh provides a new potential growth opportunity within the online channel, making investment into understanding the channel more important than ever.

Other Markets?

Since Amazon's usual pattern is to launch new services into multiple European markets, it should be considered that an AmazonFresh launch in Germany may also follow shortly. Germany is Amazon's largest international market with a loyal base of customers. This presents significant potential for Amazon to steal a march on competitors, in a market where online grocery has been slow to gain traction. If AmazonFresh were to launch here, it could drive a flurry of activity within the online market, leading to more rapid growth within the channel.

[wannabeek]

Wouldn't this be great, get us back to a crack-of-dawn delivery, and have us drop off the milk, papers, groceries, parcels and also the mail! (tho' it would have to be yesterday's mail, by today's standards). Could this be the future for RM?

[hubbahubba]

Wouldn't this be great, get us back to a crack-of-dawn delivery, and have us drop off the milk, papers, groceries, parcels and also the mail! (tho' it would have to be yesterday's mail, by today's standards). Could this be the future for RM?

And what makes you think WE would be delivering it?
Apart from Christmas I would expect Amazon to deliver as much of their own mail as they can.

[5plusbonusball]

QUOTE "In the UK, Amazon has implemented an additional ‘No Rush’ delivery option for Prime customers who are prepared to wait 3-5 days in exchange for a £3 Amazon digital media credit."
So £79 for next day del is now 3-5 days presumably because their drivers seem to be clueless and very slow in this area. Seem to be struggling so we are getting more amazon's to do.

[Sir Henry]

Yeah we've had ZERO Amazon s**t for ages and this last week or so has seen a trickle of smaller items turn into a trickle of larger items.

[music4essex]

I ordered a book off amazon for my sons exam , I ordered Saturday , paid for next day delivery , first it went to the wrong hub , to the oppisite end of the country , then they said it was on the van to be delivered which was monday , i then went to the collect place , and was told it had not arrived , the next day tuesday , was told it was being delivered , went to collect , not been delivered , I rang Amazon , to ask where it was as paid next day delivery , they said they would refund me , , my reply was not good enough as my sons exam was the next day , i then said you should use royal mail at least we deliver your goods , instead of using couriers , They gave me a refund . i wont be using Amazon in ahurry

Essex mum