Amazon Sets Sights On UK Grocery Expansion

For many retailers, the decision to expand to new service areas often comes after months or years of planning to ensure that the move will, in the end, be profitable. However, Amazon is less concerned about making a buck than most of its competitors, which means it can expand faster and farther than they ever could.

That’s what’s about to happen in the U.K., Financial Times reported. According to a source close to the decision, Amazon’s British version of its Fresh grocery delivery service is expected to announce the addition of more products and delivery areas to its food delivery operations. Previously, a limited quantity of items were offered, and orders were fulfilled not by a dedicated grocery service but rather Amazon’s Prime Now express delivery platform.

However Amazon chooses to brand its new U.K. food push, the news has some British grocery brands worried about the effect of the expansion, especially when their own delivery services are running at a loss without pressure from the largest eCommerce company in the world.

“Whatever they tell you, [the supermarkets’] online grocery services are not making money,” the chairman of a major listed grocer told FT on condition of anonymity. “They can make it look all right by reallocating capital costs here and there, but delivering food is much more labor-intensive than when your customers drive home themselves.”

Since no official announcement has come from Amazon, it’s as yet unknown what the company will charge for its dedicated grocery delivery service. American customers currently pay $299 for the privilege of speedily delivered provisions via Amazon Fresh, and anything in that neighborhood would be much more than existing programs, like Tesco’s approximate $43 annual fee for unlimited deliveries.