Amazon has recently announced that AMAZON FRESH will be launched soon in London, its first location outside the US. E-commerce world giant is then waging war on leading British online supermarket OCADO, which has been insanely successful so far.
OCADO has been created in the early 2000s by former Goldman Sachs trader Tim Steiner. 16 years later, OCADO’s sales are above £ 1 billion and its market cap on the LSE has reached £ 3 billion. Contrary to many bricks and mortar retailers that have set up online supermarkets, OCADO is profitable. Thanks to its marketplace involving supermarket chains such as Waitrose and Morrissons, OCADO provides its 500,000 active and loyal customers with ten of thousand food items.
Ocado’s success is mainly based on the efficiency of its home-made technology. 800 data analysts are working every day to make the system even better and faster. Robots are used in the warehouses to minimize errors while dealing with thousands of orders simultaneoulsy. Ocado’s technical and digital expertise have been key to guaranty both the lowest prices and a seamless customer experience, even on mobile phones. But things may be a bit tougher now.
Unfortunately for Ocado, Amazon Fresh has decided to take advantage of the Londoner’s appetite for online grocery shopping. Only available to Amazon Prime subscribers (£ 79 a month), Amazon Fresh is billed additional £7 a month. For that money, you can access 130,000 food items, delivered from 7 am to 11 pm, 7 days a week. In addition to major retailers that have already joined Amazon Fresh marketplace, the brand has partnered with more than 50 niche food suppliers to enrich its offer and meets the needs of gourmet and demanding clientele.
The time has come for the battle. Experts say that Ocado will surely take a hit and won’t be able to deliver such good financial results on a regular basis. Following Amazon Fresh official decision to enter the London market, Ocado’s stock has started to flinch on the LSE. Anyway, we can also think that Amazon Fresh inroad on the London market will shake up the whole UK food retail industry. Institutional retailers such as Tesco or Waitress, that have invested massively in their own online service, will probably be seriously undermined by Amazon Fresh proven expertise and competitiveness on the online grocery market.
Time will tell. But, as one UK shopper aged 25 to 34 out of five is already exclusively buying food online, we can expect that Amazon Fresh amazing customer service will encourage more shoppers to buy online. Long gone are the days when everyone in London grabbed a cart in a grocery store.
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