Amazon has made a surprise launch into the food and grocery market as it looks to take on the likes of Tesco.com and Ocado among others.
The world’s largest online retailer hopes UK shoppers will soon be logging in to load their weekly groceries into its virtual baskets as well.
In 2007, the company launched Amazon Fresh in the US as a test project, but has limited its deliveries to its base in Seattle. This month, the group also started selling food and drinks online through its German site.
Amazon.co.uk already sells food items such as hampers, adding the company had been bulking up on buyers who specialised in consumable goods this year.
Amazon.co.uk is to offer a range of 22,000 products, which matches the scope of rivals including Tesco and Ocado.
Amazon will be stocking 2,000 products at its five warehouses around the UK, with its largest facility, of 800,000 square feet, at Swansea Bay in Wales. The remaining products, including fresh and chilled items, will be sent from outside suppliers.
James Leeson, the head of grocery at Amazon.co.uk, said: "Amazon.co.uk's aim is to be the place where customers can find and discover any product they want to buy online, and with the introduction of this new store there are thousands of household, niche, ethnic and international grocery items," he said.
Eurofruit Magazine conducted an investigation into its fresh produce offering and found that, despite prompt delivery, the postage costed more than the produce itself.
Verdict analyst Joe Robinson said: ““Amazon’s foray into the UK food and grocery has been long mooted and thus is unlikely to be an unexpected surprise among the sector’s major players. In addition to short-term issues such as lack of website functionality and inflexibility in its delivery options, it faces a monumental challenge to build brand trust and, more importantly, loyalty in a market where such attributes are imperative.
“Nonetheless, its announcement comes at a far from ideal time for pureplay rival Ocado, which is on the verge of a IPO, hoping to raise approximately £200m to fund the next stage of its expansion. Indeed, while Ocado currently has a significant competitive advantage over Amazon, owing largely to its innovative and efficient fulfilment operations, customer loyalty and quality credentials, Amazon, with its huge resources, is likely to seek to erode this competitive gap in the long term.
He added: “The long term potential of Amazon’s food and grocery offer is likely to be in developing a reputation for bulk and niche purchases and offering a platform for smaller food and grocery suppliers rather than cultivating a significant share of the UK food and grocery market.”
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