Research Director at ResearchFarm
5 Reasons why AmazonFresh will be a
success in the EU
Aug 21, 2015
Ahead of the
imminent launch of Amazon Fresh in the EU, as reports suggest, here is our take
of what Fresh could bring to the UK in 5 short points. It is all just
speculation for now, it has to be said.
1) Unrivalled selection - though
perhaps not right from the start. We believe Amazon will leverage its 3P
marketplace to the fullest potential. Expect bread from your favourite bakery
in Islington, artisanal cheese from the hip market trader in Hackney, organic
and natural products from small scale independents and farmers. Amazon would
then offer the standard UK supermarket ranges but also a selection that the big
four are simply unable to match, at least in terms of novelty and niche
products - with perhaps the exception of Ocado and the Reflets de France range.
2) A significant raising of the bar for delivery
speeds. Prime Now promises quite incredible 1 hour delivery slots
across much of London. Fresh could ride on the back of this or at least
increase delivery speeds in the sector significantly (due to Kiva being more
efficient and quicker than human pickers and an efficient and flexible delivery
network combining Amazon’s own fleets as well as logistics partners). Amazon
discovered a golden rule early on in its journey, that the faster delivery times
became, the better conversion was on the site. Who after all would be able to
revolutionise online grocery delivery, if not Amazon, with their logistics
investments and build out? And once delivery speeds become much sharper,
completely new use case are opening up, not just in retail, but in food service
too.
3) A revolutionary new loyalty experience. Instead
of Nectar points or Club card vouchers Prime Fresh could afford Londoners (and
the citizens of Birmingham and perhaps Leipzig or Koblenz) the opportunity to
watch the Wire, listen to Bruce Springsteen and some light Jazz and read
unlimited Kindle books for free - all bundled into the price for free delivery.
In effect customers will be shopping with Amazon and get a Netflix, Spotify and
Oyster lookalike thrown into the mix, alongside free delivery. Once again, from
a shopper experience standpoint, this proposition would be very difficult to
compete with for the current market leaders. (As an aside we believe it will be
much harder to sign up German shoppers for Prime Fresh, and as a second aside
both the dash and the dash buttons might have quite an impact in future).
4) The next iteration to involve food service. We
believe that Amazon has designs on the likes of Seamless and Grub Hub or in the
UK context Just Eat and Delivery Hero. In Seattle the company has trialled
takeaway deliveries and pick ups under its spotlight offer and the newer
takeout & delivery for some time. Expect all food needs delivered from one
source. Organic cereals and confectionery from .co.uk, coffee capsules, toilet
paper and nappies through a subscribe & save subscription, fruit and veg
from fresh and in future, even recipe bags or take away meals - a comprehensive
offering if there ever was one.
5) Price leadership. This is very
speculative, but we believe Amazon Fresh could be really price competitive.
Amazon usually seeks to be the first price follower rather than the outright
leader, but this always depends on which retailers the etail giant decides to
benchmark against. In New York, Fresh outperforms the likes of Instacart,
Fresh Direct and Peapod in terms of cost and delivery speed. For the UK this
prediction depends very much on funding and how aggressive Amazon will go for
the food opportunity. It’s safe to assume though that there will be a massive
competitive challenge to the likes of Tesco, Asda, Sainsbury’s, Ocado, Waitrose
and Morrisons.
A combination
of these 5 points would make for a compelling offer and introduce something new
in the UK context, despite the UK being the most developed online grocery
market in the world. While this lays out what Londoners are able to look
forward to, in our next post we will discuss what exactly is in it for Amazon.
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