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UK Insights

The implications of Amazon Prime Now, London

Steve Mader

Vice-President, Digital Insights

Retail 02.07.2015 / 12:05

Amazon Prime Now

Kantar Retail assesses Amazon's 1hr delivery service

With Amazon launching its mobile-only convenience programme in London, offering 1-hour delivery on "thousands" of items for £6.99, or in a 2 hour window for free with a £20 minimum, what are the implications for retailers/suppliers?

Convenience retailing without stores

Amazon Prime Now is primarily a fulfilment innovation centred on Amazon's competitive advantage of scaling multiple backend shipping options into a seamless experience for the shopper. Amazon's mission to bring 'The Everything Store' to its shoppers 'every day' should be a wakeup call to UK supermarkets who have thus far been able to weather the storm by focusing on small box express/local stores to win share of convenience - an advantage which may no longer be sufficient.

The shift to grocery singles

Part of the operational challenge of Amazon's core .com assortment is the focus on case packs rather than singles. Shipping singles (such as bottles of water or cans of soft drinks) is both cost prohibitive for Amazon, as well as the supply chain of manufacturers. Prime Now is the signal that Amazon will be putting considerable momentum behind building out its grocery assortment across Europe.

Still early days on shopper experience

Remember (point number 1) that Prime Now is primarily a fulfilment innovation with a focus on getting the economics right around single item top up consumables. The actual shopper experience through the mobile app has significant room for improvement as predefined categories such as "Sunny Days" returns bottled water, sunscreen, Pimms, a Taylor Swift CD, and a children's swimming pool as the top 5 results. Search rankings also share a suboptimal result. Expect ongoing improvements to the shopper experience that suppliers may be able to influence.

By the end of 2015 Amazon expects all London postcodes to be covered, as well as expansion into additional cities.

Source : Kantar Retail

Editor's Notes

Journalists, to interview Steve Mader about Amazon Prime Now, or any other retail trends/innovation, please contact us.

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