Never one to shy away from a challenge, Amazon has recently launched an attempt to break into the UK grocery market.

AmazonFresh (separate to the company's bulk-buy Grocery section) is an online food delivery service that’s set to rival the UK supermarkets commonly known as the 'Big Four' - namely Sainsbury’s, Tesco, Morrisons and Asda.

Already available in 69 London postcodes, it’s set to be rolled out across the country in due course.

So, will it sway consumers – and indeed spell trouble for its competitors?

Here’s how Amazon is hoping its service will revolutionise our shopping habits.

Ultimate convenience

One of AmazonFresh’s biggest selling points is that it will provide the convenience of same-day delivery.

As well as offering Prime customers one-hour time slots between 7am to 11pm, seven days a week, it’ll also allow customers to get their shopping delivered on the same day if the order is placed by 1pm.

The question is – just how much are consumers willing to pay for convenience?

AmazonFresh's time-saving benefits certainly come at a price. On top of the Prime membership fee of £79 per year, the service costs an extra £6.99 on top. 

Competitive pricing

Despite its hefty membership fees (or perhaps because of it), AmazonFresh is aiming to sell its food at the most competitive prices possible.

So far, it looks like the online retailer has been sticking to its promise. According to recent analysis by Profitero, it is actually cheaper than all six of its supermarket competitors.

It’s interesting to note that Morrisons, which is now the supplier of a lot of AmazonFresh’s fresh and frozen products, remains more expensive.

Of course, this finding is merely based on produce alone, not counting the added delivery and membership charges.

But it still goes to show just how serious Amazon is about disrupting the ‘Big Four’, and with price an ever-present focus, it has clearly gained inspiration from the success of Aldi and Lidl.

Independent brands

Another of AmazonFresh’s biggest selling points is that alongside selling all the usual big name brands like Kelloggs, Persil, Heinz etc., it also stocks smaller independent brands. 

With 50 of London’s independent retailers on board, ranging from Borough Market to Gail’s Baker, it is clearly hoping to capitalise on the artisan angle.

The concept might sound a little ironic – after all, Amazon remains one of the biggest (and most controversial) companies around.

But with consumers increasingly favouring independent brands, it is undoubtedly a feature that no other online grocery retailer offers.

Of course, it is still London-centric, so it will be interesting to see how it evolves if and when other locations are added into the mix.

Promise of exclusive content

One of the biggest obstacles for AmazonFresh is, again, its Prime membership.

Existing Prime members might be more inclined to sign up to Fresh – but how will it entice new customers?

Amazon has already been trying to improve this situation, and according to figures, it’s been successful - memberships to Amazon Prime increased by 51% in 2015. 

With discounts of 20% off and exclusive online content, the retailer has been heavily investing in getting customers to sign up to its digital offering.

Naturally, efforts will continue as Amazon tries to entice customers from all angles. 

With fast delivery, digital content and now groceries on-demand, we can only wait and see how it fares.

Nikki Gilliland

Published 24 June, 2016 by Nikki Gilliland @ Econsultancy

Nikki is a Writer at Econsultancy. You can follow her on Twitter or connect via LinkedIn.

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