How will Amazon Fresh shake up logistics?
The launch of Amazon Fresh in the United Kingdom will be watched closely by the major logistics players in the countries Amazon has a strong presence, waiting to see how the move could affect them. For the moment, Amazon Fresh will be tried out in 69 postal codes in London, operating out of a warehouse rented from the Tesco supermarket chain, and in association with the United Kingdom’s fourth-largest supermarket, Morrisons. Amazon will likely pursue the same expansion strategy as in the United States, opening in new cities as and when it sees that the market is right.
Distribution in the United Kingdom is in crisis, with the four main supermarket chains, Tesco, Asda, Sainsbury’s and Morrisons, who between them control 73.2 percent of the market, seemingly unable to counter the growth of hard-discount players Aldi and Lidl, and that will now have to wait and see what impact Amazon Fresh has on their business.
How will Amazon Fresh affect these four main players? So far, none of the markets it operates in (Seattle, Los Angeles, San Francisco, California, San Diego, Brooklyn, New York and Philadelphia, has seen supermarkets closing their doors, but they will have noticed that some segments of their customer base will be very interested in the initiative. Amazon Fresh is based on the company’s Amazon Prime delivery offer, which is proving very popular with high-income households, with very high loyalty and increased spending levels.
Amazon Prime costs 79 pounds in the United Kingdom, and for an additional 6.99 pounds a month, subscribers can sign up to Amazon Fresh: not a lot of money for unlimited delivery. Logistics is Amazon’s strong point: it’s able to deliver within a couple of hours, depending on the zone, and has plans to expand the service along lines that at the moment seem decidedly futuristic, but that will be a reality in the not-too-distant future.
Throw into the mix the increasingly popular Amazon Dash buttons — a great way for brands to increase convenience and customer loyalty — and we can see the outline of what home delivery will be like in the future, but that so far, none of its competitors seem able to match.
How will the big distributors react to Amazon Fresh? Here in Spain, it will be interesting to see how the supermarkets and department stores respond. For the moment, one thing at least is clear: they will need to keep an eye on the British market following the arrival of Amazon Fresh.
(En español, aquí)
