Ama­zon free de­liv­ery plan primed to hit gro­cery ri­vals

In­ter­net shop­ping titan’s move could lead to price war and puts tra­di­tional su­per­mar­kets on back foot

The Daily Telegraph - Business - - Front Page - By Laura Onita

AMA­ZON is to of­fer free gro­cery de­liv­ery to mil­lions of cus­tomers in a mas­sive ex­pan­sion of the com­pany’s Fresh food net­work, throw­ing down the gaunt­let to tra­di­tional su­per­mar­kets.

The in­ter­net shop­ping titan will from this morn­ing al­low cus­tomers to buy cheese, baked goods, fresh meat, fruit and veg­eta­bles with no de­liv­ery fee if they subscribe to its £7.99 a month Prime ser­vice.

Ini­tially the of­fer will only be avail­able in Lon­don and the South East, but Ama­zon in­tends to roll it out across as much of Bri­tain as pos­si­ble by the end of the year.

It will be seen as a ma­jor in­ter­ven­tion as Ama­zon seeks to cap­i­talise on surg­ing de­mand for on­line gro­ceries af­ter lock­down trig­gered a huge change in shop­ping habits, with first­time cus­tomers log­ging on in droves.

All su­per­mar­kets charge for de­liv­ery at present. The fees are seen as cru­cial for fund­ing on­line sales, but Ama­zon’s de­ci­sion could spark a ma­jor price war.

Chains have been forced to hire more staff who can pick and pack or­ders in stores, as well as bring­ing in ex­tra driv­ers as they race to con­quer the grow­ing dig­i­tal mar­ket.

Be­cause of th­ese costs, prof­its are vir­tu­ally zero for sales com­ing through their web­sites de­spite the de­liv­ery charges. Tesco and Sains­bury’s have man­aged to dou­ble their ca­pac­ity since March.

The share of the over­all on­line shop­ping sec­tor has al­most dou­bled in re­cent months from 7pc be­fore the pan­demic to 13pc in May, ac­cord­ing to data com­pany Nielsen.

Rus­sell Jones, boss of Ama­zon Fresh in the UK, said that the com­pany’s as­sault on the gro­cery mar­ket had been years in the mak­ing.

He said: “Gro­cery is one of our fastest grow­ing busi­nesses.

“It’s a re­ally big deal for us. It’s not just some­thing we’ve spun up.”

The e-com­merce pow­er­house sent shock­waves through the in­dus­try when it bought high-end US com­pany Whole Foods Mar­ket for £10bn in 2017. It had launched Ama­zon Fresh in the UK a year ear­lier.

Su­per­mar­kets have long feared a chal­lenge from the $1.5 tril­lion (£1.2 tril­lion) tech be­he­moth, which crit­ics ac­cuse of al­most sin­gle-hand­edly de­stroy­ing much of the high street through an ag­gres­sive cam­paign of ex­pan­sion.

It has far deeper pock­ets than any UK player and is thought likely to ac­cept many years of losses in or­der to beat ri­vals.

Thomas Br­ere­ton, a re­tail an­a­lyst at Glob­alData, said: “Ama­zon can keep do­ing this.

“The fear of los­ing money is nowhere near as great [for Ama­zon] as it is for the other gro­cers. It is go­ing to worry ev­ery­one in the mar­ket.”

Prime cus­tomers will be able to choose from tens of thou­sands of gro­cery items from ma­jor brands in­clud­ing Whole Foods, Pepsi and War­bur­tons.

They can also add premium prod­ucts from ar­ti­san and lo­cal busi­nesses such as Gail’s bak­ery and Pax­ton & Whit­field, the cheese­mon­ger.

Ama­zon al­ready has 14 de­pots in Bri­tain where it can store the food at the right tem­per­a­ture, it said.

Mean­while yes­ter­day, Ama­zon said it would cre­ate a fur­ther 1,000 jobs in Ire­land, bring­ing the to­tal work­force in the coun­try to about 5,000.

It also said it would in­vest in a new cam­pus in Dublin for its cru­cial cloud com­put­ing busi­ness.

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