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Amazon set to expand fresh online sales

By Mike Stones+

05-Mar-2014
Last updated on 05-Mar-2014 at 15:38 GMT2014-03-05T15:38:17Z

Amazon is likely to roll out fresh deliveries internationally after US expansion

Amazon is likely to roll out fresh deliveries internationally after US expansion

Online retail giant Amazon is poised to deliver “a fresh approach” to the UK grocery market, with online sales of fresh, chilled, frozen and ambient food products delivered direct to customers, predicted Charles Wilson, Booker chief executive.

“In the UK, Amazon is selling ambient groceries but in Seattle they offer the full fresh and frozen offer,” Wilson told the City Food Lecture audience in London last month. “I’m excited that Amazon will bring a fresh approach to the grocery trade here in the UK.”

Doug Gurr, Amazon UK vice president, confirmed that the retailer’s full range of food formats was now being rolled out across north America, after a successful eight-year trial in Seattle ahead of a possible global launch.

Start rolling it out

“We have an operation that was initially in Seattle which involves chilled, frozen, fresh and ambient that absolutely involves a full chain that delivers direct to customers,” said Gurr. “We have just started rolling that out across America and it is now available on the West Coast. This is not a forward statement of plans because we do not make those. But if you look at the history of what Amazon tends to do, our model tends to be to take something and to try really hard to make it work and then, when we think we have got it right, start rolling it out.”

Gurr – who formerly led Asda’s food home shopping business – acknowledged the difficulties of managing fresh food supply chains. But added: “We now believe we have got it right – for customers and growers – and that we can maintain quality. We are trying to roll it out across north America and then, history would suggest, it is followed by international expansion.”

While a supermarket would typically carry 30,000 lines, online players like Amazon will carry millions and increasingly command greater financial fire power, said Wilson. “In 1980, Sainsbury was one of the largest market capitalised companies on the planet. Today Sainsbury and Tesco are now dwarfed by Amazon and the expected IPO (initial public offering) price of Alibaba, the Chinese online power. These online players have huge financial strength to take growth away from the traditional supermarkets and connect with consumers,” he said.

Questioned Amazon’s ability

But Dominic Watkins, head of food group and partner at law firm DWF, questioned Amazon’s ability to deliver fresh food on an international scale. “While it has a phenomenal distribution network for the ambient goods it already sells, it is not clear whether Amazon has the network for fresh food, which needs to be kept refrigerated and therefore cannot be delivered to residential addresses by the same wide range of third-party logistics companies that can deliver regular goods,” said Watkins.

Are supermarkets becoming a spent force in UK retailing? Food suppliers should ditch no growth supermarkets, according to Charles Wilson, chief executive of Britain’s largest cash and carry wholesaler Booker. Read why Wilson believes supermarkets are becoming a spent force.

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