Shownotes
This Omni Talk Retail Fast Five segment explores Amazon's expansion of same-day grocery delivery in the UK and what it could mean for the future of grocery retail.
Chris Walton and Chap Achen discuss why the UK grocery market presents unique challenges, whether Amazon can steal share from established players, and why omnichannel execution remains critical.
The conversation also examines how delivery expectations continue to evolve around the world.
⏩ Tune in for the full episode here: https://youtu.be/BYxUBG-sSTQ
#Amazon #GroceryDelivery #AmazonFresh #RetailNews #Omnichannel #Ecommerce #RetailTechnology #SupplyChain #RetailStrategy #OmniTalk
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Transcripts
Amazon has launched Fresh Grocery same day delivery in parts of London, allowing customers ineligible postcodes to add perishable items like produce, meat, dairy and frozen foods to the same basket as millions of other Amazon products for delivery within hours.
Speaker A:According to Amazon blog posts, the service is initially live in parts of central and East London with plans to expand to additional postcodes and more areas across the UK in the coming months.
Speaker A:Prime members get free same day delivery on orders over £20 with fresh groceries now included at no additional delivery fee.
Speaker A:Non prime customers pay a 599 delivery fee regardless of basket size.
Speaker A:This launch builds on Amazon's broader UK grocery expansion which includes Amazon now growing Amazon Fresh selection and partnerships with Morrisons Co Op, Iceland and Gopuff and Whole Food Market stores in the uk.
Speaker A:Chris how significant is Fresh same day delivery grocery in the UK for the future of grocery retail globally?
Speaker A:And how closely should U S grocers be watching Amazon's moves overseas?
Speaker B:Oh my God.
Speaker B:A two parter chap.
Speaker B:All right.
Speaker B:I mean I think you gotta watch it closely and I think it's a very significant move.
Speaker B:That's, that's what I think here.
Speaker B:And I say that for, I say that for two reasons.
Speaker B:You know, number one, you know, their strategies are this strategy is already being deployed in the U.S. this is funny that this is actually one time where we're seeing something come to the US before it comes to Europe, especially in grocery.
Speaker B:That's what's so fascinating to me about this story.
Speaker B:And then the second thing I'd say is, and for that reason is like the online grocery market in the UK is so much more entrenched but it's.
Speaker B:I was talking to friends of mine out here at Shop Talk Europe about this to make sure I had this right and they said I did but, but it's really based on next day.
Speaker B:Like an Ocado is really the, you know, the winner and Tesco is the winner there in terms of next day grocery delivery.
Speaker B:So if Amazon can actually make a chunk or a sizable dent in same day or make that the consumer expectation via just.
Speaker B:Even if it's just the add ons like the milk with the electronics purchase like we hear in the States here all the time that Andy, Andy Dassey is always trying to hype up, then I think there's a real there there and it all comes back to me.
Speaker B:Chap to the long game.
Speaker B:We've talked about this on past shows but it's for Amazon it's just about winning the war of attrition.
Speaker B:The slow Kill the death by a thousand cuts, you know.
Speaker B:But over time then Amazon becomes the default grocery fulfillment for all regional grocers, both in the US particularly, but then also the smaller grocers in the UK too, who are already becoming part of their marketplace.
Speaker B:I think Morrison is part of their marketplace, if I'm not mistaken.
Speaker B:And so, you know, if they do that, you know, 10 to 15 years from now, all of those retailers are going to be less and less valuable in the market.
Speaker B:And Amazon can either buy them on the cheap or just watch them go out of business.
Speaker B:I think that's what Amazon's play is here.
Speaker B:But what do you think?
Speaker A:Interesting.
Speaker A:Yeah, you know, so the Walmart move made a ton of sense because we're pairing more food with food.
Speaker A:It's the same use case.
Speaker A:That's a great point.
Speaker A:I need, I need food.
Speaker A:Now on Amazon, we're mixing use cases.
Speaker A:I need food and a phone charger.
Speaker A:Now, of course, as you said, we have seen Amazon do this in the US and it worked.
Speaker A:Right.
Speaker A:Amazon reported they met their expansion targets of the same day and you know, with people ordering perishable items with normal Amazon items and they reported customers coming back at 2x the rate of customers who didn't.
Speaker A:So they did prove that it works.
Speaker A:Right.
Speaker A:So it didn't make sense to me at the beginning.
Speaker A:But like the consumers are, it's, it's resonating.
Speaker A:But the nuance here is the market.
Speaker A:As you said, the US online grocery market is in a period of rapid growth.
Speaker A:Right.
Speaker A:Of.
Speaker A:And the consumer is more open to experimenting with online grocery.
Speaker A:And so that's driving trial.
Speaker A:In the uk, growth rates are much more modest, the market's much more mature.
Speaker A:So Amazon's going to have to steal market share to make this work.
Speaker A:Right.
Speaker A:And the data supports the customer adoption and the retention.
Speaker A:But here I've got to go steal it from more entrenched players to make it grow in the market.
Speaker A:So that's, to me, the challenge for Amazon here.
Speaker A:If I zoom out to the macro.
Speaker A:Amazon grocery delivery versus Omnichannel grocery delivery.
Speaker A:I still place my bet on omnichannel grocery LED delivery because of this.
Speaker A:Right.
Speaker A:So we've been selling stuff online for 25 plus years and we're at 20 to 40% penetration rates given the category.
Speaker A:Right, Right.
Speaker A:But the consumer.
Speaker A:So the consumer did not stop shopping at stores and will not stop shopping at stores, especially grocery stores.
Speaker A:So in the long game, I give better chances to those that can execute both offline and online at a high level.
Speaker A:But Note that I said at a high level because just because you have both channels does not mean success.
Speaker A:And we know Amazon can execute at a super high level.
Speaker A:So this is the key issue for grocers in the long game is you need to execute at the same high level as Amazon in order to retain this omnichannel advantage.
Speaker A:It can't just be about your in store experience because consumers have this great option, online option over here on Amazon and if that gets really good, yeah, they're, they are going to stop shopping as frequently in your stores.
Speaker A:So that's the super interesting long game, I think that's being played here.
Speaker B:Yeah, yeah.
Speaker B:Or, or if I say it another way, you can't just dig in your, dig your head in the sand if you happen to run stores and think the stores are going to save you.
Speaker B: he industry do for all of the: Speaker B:Really, you know.
Speaker B:Right, Chap.
Speaker B:That, that's just kind of what you're saying again.
Speaker B:But yeah, the other point about this too, which I want to go, I want to go retail wonk a little bit too.
Speaker B:And Chad, I think you'll appreciate this too.
Speaker B:The one thing that we're not so certain about in the media and in terms of covering Amazon is, you know, how well is this strategy actually doing?
Speaker B:Because, you know, they keep talking about the essentials too, as it was really written in this headline to you, and they talk about their, their market share in grocery being very high.
Speaker B:But generally speaking, that's driven by the essentials purchases and by the essentials.
Speaker B:I mean, not all the stuff you can find in a grocery store, but not the food.
Speaker B:Right.
Speaker B:You know, it's like the dishwashing detergent, the stuff that you're going to go, the laundry, the laundry detergent, the soap, that kind of stuff.
Speaker B:So, and, and that might still be working like this.
Speaker B:Like the, you can get your, you can get your dishwasher soap with your electronics.
Speaker B:Yeah, sure, right.
Speaker B:But like, is that really grocery?
Speaker B:I don't know.
Speaker B:Time's gonna tell.
Speaker B:But I think that's one caveat I would say, you know, as we're seeing these moves from Amazon, it's a little unclear to me, you know, exactly how well it's.
Speaker A:Yeah, yeah, I agree with that.
Speaker A:It goes back to the definition of omnichannel.
Speaker A:All products to all consumers across all sales channels.
Speaker A:And the Amazon experience doesn't quite feel like omnichannel grocery right now.
Speaker A:It feels like a part of the grocery store.
Speaker A:Which goes back to the point of like if you can, if you are a store based grocer and you can pull off Omnichannel, I give the nod to those folks.
Speaker A:Right?
Speaker B:Because it is different delivering ice cream as an example with your electronics than it is say.