Amazon set to widen footprint in UK grocery market as it revamps Fresh proposition

Amazon has announced plans to expand its footprint in the UK online grocery market, through greater integration of its Amazon Fresh proposition with its Prime membership, making grocery deliveries free for Prime members on orders over £40 in a select number of postcodes.

Thomas Brereton, Retail Analyst at GlobalData, a leading data and analytics company, offers his view on this news:

“The introduction of free delivery on Amazon Fresh orders over £40 for Prime members signifies the online giant’s desire to take a larger share of the rapidly growing online UK grocery market (forecast to grow 76.2% to £19.5bn in 2020, following the significant uplift in demand amid the COVID-19 lockdown restrictions).

“Given almost half (43.1%) of the UK population has access to an Amazon Prime account*, the potential gains for Amazon within food are enormous, and one that has the ability to ruthlessly steal share from major competitors in the arena such as Waitrose, Ocado and Sainsbury’s. Furthermore, from a consumer standpoint, monthly food purchasing is a much more predictable value than non-food expenditure, and so the offer of free delivery will persuade more shoppers to see regular value in the Prime subscription model.

“But this will not be an easy mountain to climb for Amazon, despite its financial and logistical prowess. Many UK shoppers have a much more emotional bond with food than non-food, and Amazon’s greatest challenge will be in presenting itself as a “go to” destination for food purchases. At the same time, the major UK grocers operating in the same sphere are all expanding their own home delivery operations, and so to be a true success Amazon will need to make strides in a number of other competitive areas such as customer service, product quality, perception of freshness etc.; aspects that the traditional grocers have been building for years.”

*Survey of 2,000 nationally representative UK respondents, undertaken in August 2019.

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