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AmazonFresh Turns Up Pressure on British

Supermarkets Food Delivery Service
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Amazon has launched a British version of its U.S. AmazonFresh food

delivery service, stepping up the pressure on the traditional big
supermarkets already locked in a brutal price war. By James Davey
Latest News & Press
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Apple

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June10,2016
InalonganticipatedmovetobreakintoBritains178
billionpounds($257billion)grocerymarket,the
worldslargestonlineretailerlaunchedAmazonFresh

Volkswagen,ToyotaInvestingin
Ridesharing
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AmazonFreshTurnsUpPressureonBritishSupermarketsFoodDeliveryServiceSupplyChain24/7

worldslargestonlineretailerlaunchedAmazonFresh
onThursdayinpartsofcentralandeastLondon.
Britainhasoneoftheworldsmostdevelopedonline
grocerymarketswiththebigfourretailersTesco,
Sainsburys,WalMartsAsdaandMorrisonsalready
competingwithspecialistdeliveryfirmOcado.
Theonlinegrocerybarisevenhigherinthecapital.
TheentryofAmazonFreshintotheUKdoesnt
comeoutofthebluebutitwillfurtherworryinvestors
aboutthefundamentalsandprospectsoftheUK
foodretailmarket,saidBernsteinanalysts,who
estimateAmazoncouldeventuallytakeupto13
percentofallfoodsalesinthecountry.

CompanyQuicklook

2016UPSPulseoftheOnline
Shopper
ThelatestUPSStudy
showsavidonline
shoppersmakingmore
thanhalfoftheir
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Britainsonlinefoodmarketisexpectedtonearlydoubleto17.2billionpoundsinthe
fiveyearsto2020,accordingtoindustryresearchgroupIGD.
Wearelaunchingwithacomprehensiveofferinalimitedareaandwilltakeourtime
tohoneandimproveourservice,AmazonFreshvicepresidentAjayKavansaid.
AmazonFreshwillinitiallyofferafullgroceryservice
fromadistributioncenterintheeastofthecapital.It
planstousesmallandmediumsizedexternalcarriers
fordeliveries,whichcouldbeonthesamedayasthe
order.
UKRollout
SharesinBritainslistedsupermarketshavebeen
hammeredinrecentyearsasthegrocerymarkethas
beenconvulsedbychangingshoppinghabits,therise
ofGermandiscountersAldiandLidlandprice
competition,andanalystsseeAmazonFreshasa
potentialchallengetothewholeindustryovertime.
Wewillbeverymethodicalandconsideredinhowwe
rollthisserviceoutfurtherintheUK,Kavansaid.

Wewillbevery
methodicalandconsidered
inhowwerollthisservice
outfurtherintheUK

ShoppersintheeligibleLondondistricts,orpostcodes,
whoaremembersoftheAmazonPrimesubscription
AjayKavan,AmazonFreshVP
servicewillbeabletochoosefromarangeofmore
than130,000products,includingabout20,000groceryitems.
AmazonwillofferfreshandfrozenproductsfromMorrisons,withwhichitstrucka
wholesalesupplydealinFebruary,brandsincludingCocaCola,Kelloggs,Danone,
WarburtonsandWalkersaswellasproductsfromlocalfoodproducersandshopsin
locationssuchasLondonstrendyBoroughMarket.
AmazonPrimemembersintheUnitedKingdompayanannualsubscriptionof79
pounds.Theycansignupfora30daytrialofAmazonFreshandwouldthenpay
6.99poundspermonthfortheservice,withunlimiteddeliveriesforordersover40
pounds.
Impact
Intheshortterm,BernsteinanalystsreckonAmazonFreshsfocusonLondonandits
upmarketbiascouldmeanSainsburysishitthemostoutoftheBigFour.Butthey
saidTescoandOcadoarealsoexposedastheyhavethelargestshareofLondon
basedonlinefoodsales.Therewas,however,littleimpactonstockpricesfollowing
theAmazonFreshlaunch.
InApril,Sainsburysagreeda1.4billionpoundtakeoverofArgos,amovewhichwas
seenasadefensiveplayagainstAmazon.
OnefoodretailexecutivefromoneofthebigfourplayerssaidAmazonwouldonly
significantlydisruptthemarketifitcouldsuccessfullytargetthe60percentofstore
salesthatarejustsmallbaskets.
IfAmazoncanworkouthowtodeliverthosetopupshopsprofitablyandinatimely
mannerthenIthinkwellseeotherretailersrespondandthatslikelytogrowthe
overallmarketshareofonlinesalesfromaroundthe7percentmarkandaccelerate
thegrowth,hetoldReuters.
AmazonlaunchedafreshfooddeliveryserviceinSeattlein2007andhassince
movedtoahandfulofotherU.S.cities,butithasstruggledtofindthebestpricing
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movedtoahandfulofotherU.S.cities,butithasstruggledtofindthebestpricing
model.

IthasofferedsomefoodanddrinkitemstoBritishcustomerssince2010,andin
NovemberextendedapackagedgroceriesofferalreadyavailableinGermanyand
JapantoPrimemembersinBritain.
Source:Reuters
Related:AmazonExpandingOnDemandDeliveryService

DownloadthePaper:AmazonsMoveintoDeliveryLogistics

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