Spotted This Week: The Amazon Morrisons Deal

Spotted This Week

Is Amazon redesigning the UK grocery market?

Amazon has entered the grocery retail market via a new partnership with Morrisons supermarket. They will now offer their ‘Amazon Prime Now’ and ‘Amazon Pantry’ customers the opportunity to buy fresh and frozen products from the grocer.

It is an interesting move as Aldi and Lidl were considered the biggest threat to grocers, but will this deal change food and supermarkets?

This is just one of the many investments Amazon has made in recent years. Since the late 1990s they have spent big on technological infrastructure, building market share and subscribers, offering same-day delivery and streaming music and video. Although not all succeed, Amazon do appear to create real value for customers and are not afraid of trying something which may fail.

Why has Amazon gone down the food route?

This is the first deal the giant American online retailer has signed with one of the current Big Four UK supermarkets and they are yet to confirm what products will be sold with prices likely to be on par with supermarket to avoid any undercutting.

Amazon are proven with a speedy turnaround and a delivery service which is quicker than most others, so will this also work for food? Does this move lead to further investment and innovation from other big players?

Amazon are tapping into a profitable market. Major online grocers (Tesco, Sainsbury’s, Asda, Waitrose, Ocado and Morrisons) reached £6.7bn in 2014 and is predicted to grow to £12.6bn by 2019.

Could this deal really change the UK grocery sector?

  • The move is likely to force rival supermarkets to reassess their online capabilities and delivery methods.
  • It is a positive boost for both brands: Morrisons will put their products in front of a new audience and for Amazon it may showcase them as not only a speed delivery retailer but one which provides food too.
  • Amazon may have almost instant consumer trust because the food comes from a credible player.
  • Morrisons already had a 25-year supply contract with Ocado, the online supermarket, so what will happen to this relationship? Is this extra competition?

Amazon have truly announced their intention to rework the market in the UK. The retailer is known for creating Amazon Prime to secure customers and increase their spending, so the question now is, how will they do the same for grocers?

Is this the right move for Amazon?

Is it the right move for Morrisons?

Is delivery in under an hour something essential for you?

For more information on ‘Spotted this week’ please contact Ben Butler

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