Amazon is looking to strengthen its hold over the e-commerce market in the UK by expanding into the fresh and frozen groceries market, which would put it directly against major brands like Tesco, Sainsbury's, and Waitrose. Called ‘Amazon Fresh’, the service already exists in the US, where it was launched in 2007. Since, it has caused food prices to lower by around 2%. Amazon Fresh has also had a very positive effect on Amazon's overall profit in America, causing its market value to jump to around $265 billion (£171 billion) over the past eight years.
So far, we don't know too much about the proposed launch of Amazon Fresh in the UK, but the current rumours have been sparked by the fact that Amazon has just leased a former Tesco food warehouse in Surrey, which reports suggest is over 300,000 square feet. For UK e-commerce analysts, an expansion of this kind has long been on the cards for Amazon, and now it looks as if we'll finally be getting Amazon Fresh in the UK. At present, it's suggested that Amazon Fresh would attempt to account for around 2% of the UK grocery market, which is currently valued at £149 billion.
For Amazon, expanding into the grocery market will mean making significant changes to its order fulfilment processes, including everything such as warehouse storage, picking and packing, delivery methods and shipping options. Therefore, this kind of expansion demonstrates that Amazon is confident in not only its ability to adapt to new order fulfilment processes, but also in its potential for success. Clearly, expanding into a new market requires a significant outlay of initial capital, and therefore Amazon would not make this leap unless they were certain of success. Although as of yet we have no specific details of the expansion, or what a projected profit rate would be for Amazon Fresh in the United Kingdom, what we can say is that a venture of this kind would represent a significant expansion for the e-commerce giant, which would see them make further significant gains in the e-commerce market.