E-commerce delivery player Fastlane International has warned the grocery industry not to underestimate the impact of Amazon Fresh in the UK, and Walmart’s Uber tie-up in the US. In a statement sent to Post&Parcel yesterday (9 June), Fastlane International said: “The much anticipated launch of Amazon Fresh in the UK will deal a heavier blow to the ‘big four’ supermarket chains than many industry analysts imagine. And with Walmart (owners of UK supermarket Asda) trialling deliveries with Uber in the US, the grocery market could be transformed in the next few years.”
Fastlane’s Head of Consumer Research, David Jinks, commented: “Industry analysts are claiming that Amazon in the UK will capture no more than 3% of the grocery market from the current big players. That’s probably what book sellers told themselves 20 years ago; the electronic goods market believed 10 years ago, and clothing stores five years ago. But the fates of Borders, Comet and now BHS highlight what happens when Amazon moves into your industry.”
Jinks continued: “Amazon’s recent tie up with Morrisons should worry the likes of Asda, Sainsbury’s and Tesco. Amazon is spending big sums on its delivery network and that means it needs more than 3% of the market to recoup its investment. That’s why its Fresh launch in London also includes tie-ups with well-known local food producers such as the confectioners Konditor & Cook and Gail’s Artisan Bakery, to fulfil their deliveries.”
The Fresh service is tied in with the Amazon Prime membership proposition, and Fastlane said that this is an effective way of “locking in more customers”.
“It’s worth spending the significant sums involved in developing its logistics infrastructure if it means Amazon becomes the default online provider in yet another area of retail for many consumers,” said Fastlane.
Online-only providers could feel the impact even further, claimed Fastlane.
“Companies such as Ocado are facing the same issues that the e-reader industry providers Blinkbox Books, Diesel ebooks and now Nook in the UK had to compete with,” commented Fastlane, adding ominously: “None of these names survived the test.”
But the grocery market shake-up won’t stop with the Amazon move. Jinks explained: “Walmart is conducting trials with Uber in the USA to deliver food products. It’s a logical next step for the taxi App, which is just as suited to deliver goods as people. Walmart will be able to offer near instant deliveries on its groceries; giving it a significant advantage over competitors. We believe the UberRush and UberEats services are on their way to the UK, and the power of crowdshare Apps in the grocery delivery market will be another blow to traditional retailers.”
It is also worth noting that Uber announced yesterday that it has just taken the big step of making its UberRUSH API publicly available. What this means is that all retailers will be able to build an UberRUSH delivery option into their e-commerce websites. At the moment, the geographical coverage for UberRUSH is limited to New York, Chicago and San Francisco – but the company has indicated that it will soon be moving to more US cities. And Uber has the money to fund this growth. The company received a giant boost to its war chest at the start of this month, through a $3.5bn investment from Saudi Arabia’s Public Investment Fund.
Click here for more Fastlane analysis on Amazon’s approach to retail deliveries and the growth of ecommerce.