Page Impressions Ltd Blogcetera: Is Amazon about to enter the Grocery business in the UK?

Tuesday, February 10, 2009

Is Amazon about to enter the Grocery business in the UK?

It was recently reported that Amazon is to take on the major supermarkets with the launch of an online food store in the UK and Industry experts say the ambitious plans are a huge threat to Tesco, Sainsbury's, Asda and Morrisons.

However, speaking in the Grocer, Amazon’s UK MD, Brian McBride has denied that they have any such plans, as the company “had enough on its plate” adding that “it’s a bit of a speculative story”.

So what is the background to this story.  Amazon is undoubtedly an incredibly successful online retailer and has a massive customer base for its range of DVDs, books, electrical products and most recently opened new clothing offering.  In the US, Amazon have indeed launched an online grocery service called Amazon Fresh, which was piloted in 2007 and is limited to Seattle and the surrounding area.

Unlike the US, the UK has a plethora  of main supermarket groups running successful Internet Grocery services as well as the privately funded Ocado service delivering Waitrose products.

Despite claims in the Daily Mail at the end of January, that Amazon could easily roll out a grocery service in the UK as “due to the shorter delivery distances”.  I suspect Ocado might disagree.  Amazon have been running the “trial” service for almost two years and is still limited to their home town of Seattle.  It still has not rolled out to other lucrative metropolitan markets in the US let alone considered expanding in the UK.  Equally I wouldn’t necessarily accept that Amazon is entirely on top of its delivery game in the UK judging by some recent delivery experiences of my own.  It is one thing to deliver a book or DVD, it is quite another to deliver ones weekly shop.  Maybe a better plan may be a JV with Ocado would be a better option extending the Amazon online brand magic to the newly independent internet grocer.

In the meantime, I don’t think Tesco’s or ASDA will be factoring in UK competition just yet.  Lucky the snow came along before the newspapers wrote any more "speculative stories".