Following on from my recent article about the battle brewing between Amazon and Jet for online ecommerce, it looks like Amazon is within a month of launching a fresh grocery service in the UK called Amazon Fresh.
When comparing Amazon and Jet I did suggest that I believe Jet will struggle to succeed even if they can offer lower prices than Amazon. My point was that price alone is not the only factor that encourages a shopper to buy from one store or another. The Amazon approach to customer service means that they will retain many customers even if they need to spend a little more.
However, with fresh groceries I think the market is different. As has been seen in just the past five or six years, the growth of brands such as Aldi and Lidl has been fuelled by consumer demand for bargains.
Amazon clearly faces a challenge in the UK, as the public do not associate their brand with fresh groceries. They don’t spend millions on advertising in the way that the established retailers do – and always have done.
Food is also an emotive subject. Marketing fresh groceries needs a new approach of ‘marketing to the senses’ to entice people to spend. However, Aldi and Lidl have shown that a market is out there for lower-cost groceries. Lower-cost products have been particularly popular since the most recent recession and now these brands have arrived they have become a part of the retail landscape.
Amazon will have a lot of work to do building a connection between their brand and fresh groceries, but it is not impossible. Before the global financial crash who could name any of the discount retailers that are popular in the UK today?
Add this potential for new competition to the excellent ecommerce and supply chain model and innovations such as Echo and Dash and suddenly there is the potential for large-scale disruption in UK retail. Imagine adding to your shopping list just by speaking out loud inside your home, telling the system when you want your groceries delivered, and having a physical button on your fridge that triggers a delivery.
My wife and I spend time every week updating our existing shopping lists and we both hate it. Being able to order online was an improvement over having to spend an hour in the supermarket selecting everything personally, but if Amazon can tie together their various services it could be game-changing.
The result should be good for us all. More innovation in retail will drive up the quality of service and potentially drive prices down. I’m looking forward to seeing how the UK goceries market will develop over the next decade.
What do you think might happen if Amazon enters the UK market this year? Leave a comment here or get in touch via my LinkedIn profile.
Photo by Amish Patel licensed under Creative Commons.