Annie Dawson, TMF Tutor, writes……..
I guess you will either love it or hate it…but currently Amazon is certainly loved by millions…and is set to become part of our daily conversation (if it’s not already)…
Hot off the news today that Amazon are entering the fresh food market with a tie up with Morrisons…offering fresh and frozen products to customers – with delivery in some places in under an hour…we take a little look at what is so compelling about their proposition.
Enabling the online retail giant to compete with Britain’s biggest supermarket stores and smallest local shops, the deal opens another front on Amazon’s assault on the £178bn British grocery market, already hammered by a brutal price war and changing shopping habits.
Amazon will now add hundreds of fresh and frozen products to its existing offering of packaged grocery goods, setting it up to take on Tesco, Sainsbury’s and Asda, as well as online specialist Ocado, in one of the world’s most developed online retail markets.
The Morrisons tie-up gives Amazon a platform to attack a UK online grocery market predicted to nearly double to 17.2 billion pounds in the five years to 2020, according to industry research group IGD.
Amazon has also begun surveying UK customers about their use of restaurant delivery services, in what analysts said was likely the first step in an international expansion of a business it rolled out in the U.S last September.
Morrisons, with a smaller footprint in the more affluent areas of London and the south east of England than Tesco and Sainsbury’s, may have gambled that it could cope better with the arrival of Amazon which would typically target those areas.
Research by shopper management specialist Bridgethorne, reveals that 78% of 18-34 year olds will “probably or definitely” try grocery shopping with Amazon. Only 5% said “definitely not”
When asked what proportion of their grocery shop they could realistically see themselves doing with Amazon, 11% said they would do all their shopping with them, and 27% said “nearly all”.
Amazon will need to ensure they deliver on many fronts if they are to lure shoppers away from the known and trusted Tesco and Sainsbury et al….and currently potential customers aren’t entirely sure why they would pick Amazon…
When asked how they thought Amazon would compare to their usual supermarket on a range of service measures, such as price and availability, one in two believed that Amazon and the supermarkets would offer “the same” standards. The rest of the respondents (36%) though believed that supermarkets would do a better job across the board than Amazon.
Older shoppers will probably prove the hardest to win over as they tend to be less bowled over by the thought of switching supermarkets, 74% of those in the research group were emphatic in their feedback ‘definitely or probably won’t ever try (Amazon)
UK grocers are pretty savvy – and despite the odd blip, pretty good at understanding and delivering on consumers’ needs. Amazon will have to prove it’s as good as – if not better than the current retailers if they are to steal a march.