Amazon Enters the Online Grocery Market

Posted on 05 Aug 2016 by Anna Scott
With Amazon entering the online grocery market on its AmazonFresh platform (currently only available in London but set to expand to the rest of the UK), online supermarket services seem to be thriving and the demand for grocery delivery is on the increase. But what can customers expect in the future when it comes to more and more choice in providers? And what are current retailers doing to improve their current services? We take a look at what’s in development as well as a few current offers to see how customer can benefit both now and in the longer term…


Will AmazonFresh Make its Mark?

Online shoppingIt should come as no surprise to find out that Amazon is moving onto supermarket turf. Not only does this retail giant seek to offer better and more innovative services in many different shopping categories, but the online grocery market is constantly expanding and therefore presents itself as the perfect target. IGD forecasts that the UK online grocery market will be the fastest growing part of the country’s supermarket business over the next five years, doubling in value between April 2015 to April 2020. 26% of grocery shoppers class themselves as regular users of online services, with 11% saying it’s how they do most of their food shopping. When it comes to a gap in the market, its telling that 42% of UK grocery shoppers have said they would consider converting to online shopping, while 33% deem themselves lapsed online shoppers, saying they would use them again if there were lower delivery charges and scope for better product selection. So yes, taking all this into account, we think it’s fair to argue that Amazon and other new providers could well tap into this market if they can satisfy these issues as well as tempt new customers.


Will Customers Move Away from Traditional Supermarkets?

Shopping receiptOne of the challenges faced by the AmazonFresh service is that customers don’t associate them with grocery products. 76% of shoppers who have previously bought food items on the site say they are unaware of the full range of grocery items on offer, but 40% of these customers say they would consider buying fresh food from them in the future. The success of the Ocado delivery service has shown that UK customers are willing to move away from traditional supermarket brands if they are promised a combination of good customer services and prices, and Ocado promo codes continue to attract new UK customers with offers including a £20 saving on first orders.


How Are Supermarkets Improving Their Online Services?

Supermarket fruitWith customers demanding better value delivery services, some big supermarket names and well-established services are responding. As well as offering £18 off first orders, Sainsburys discount codes now give customers free delivery for orders over £100, and for lower-priced purchases, they can take advantage of 1-hour delivery slots from £1. Ocado also offers free delivery for a whole year once customers sign up, and Waitrose promotional codes give customers free delivery on their first 5 orders as well as £20 off each. The good news for many online grocery services is that customer loyalty is higher in this category than with in-store shoppers (54% compared to 50%).


What Can Customers Expect in the Future?

Amazon shopping onlineIf successful, the influence of AmazonFresh could be far-reaching in terms of delivery. At present one of their points of difference is the ability to offer same day delivery when ordering before 1pm and with same day delivery becoming increasingly popular in online retail as a whole, it feels like a matter of time before supermarkets and online grocery services start to offer it too. Another innovation that is set to be introduced by Amazon is AmazonDash, an ordering tool which will enable customers to scan items so they can build a digital shopping list which will be ready and waiting for when they need to place their order. Many supermarkets already store customers’ favourites and previous orders, but it feel inevitable they too will soon start to utilise phones and tablets in different ways to make the process even more convenient.


Whatever changes are ahead, it seems like it will be the shopper who wins, both in terms of customer service, convenience and price. With more and more providers in the online grocery business, we can only hope for improved services and more competitive offers in the future.

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