It wasn’t so long ago I wrote a blog about Amazon’s latest developments. True to form, the retailer has announced yet another significant investment – this time in the UK. After months of speculation about the launch of Amazon Fresh in the UK, the online retailer has entered into a new grocery supply deal with Morrisons.
Over the coming months, Morrisons’ products will be available to Amazon Prime Now and Amazon Pantry shoppers. Morrisons will provide a wholesale supply service to Amazon, allowing Amazon’s shoppers access to a wide range of Morrisons’ ambient, fresh and frozen products. David Potts, Morrisons chief executive has said about the new partnership: ‘The combination of our fresh food expertise with Amazon’s online and logistics capabilities is compelling’.
Which grocery categories are currently performing well on Amazon?
In research I conducted last year, around a third of British online grocery shoppers claimed to have bought at least one grocery product in the last month on Amazon – this equates to nearly 10% of all British grocery shoppers. However, what is interesting to note are the categories which shoppers are most likely to say they have purchased on Amazon – non-food grocery items are the most popular according to shoppers.
Non-food grocery continues to dominate grocery shopping on Amazon in 2015
Health and beauty items are the most likely grocery products to be purchased on Amazon, along with pet food and laundry/household cleaning products. Top food and drink product groups shoppers claim to buy on Amazon are confectionery and more niche products such as international food/drink and home baking items.
Amazon has been investing in sophisticated health and beauty pages which help to add weight to its expertise in these categories.
Amazon showcasing its credentials in health and beauty
What’s the fresh opportunity?
Speaking to some shoppers recently in focus groups about food and grocery shopping on Amazon, they are more likely to associate the online retailer with ambient and non-food grocery items, as opposed to fresh and frozen categories. However, there is appeal for fresh on Amazon.
Of the shoppers who have purchased some grocery products on Amazon, nearly four in ten (37%) say they can imagine buying all of their food and groceries from the online retailer in the future. Over a third (35%) say they would consider buying fresh food such as fruit, vegetables, meat or fish, indicating there is appetite among those who have used the retailer in the past for some of their groceries, for fresh ranges. It could be more difficult to convince shoppers who have never used Amazon to buy groceries from an online retailer before.
How to convince shoppers
Implementing fundamental online category management principles will be important to help drive expertise and exploit this acceptance by shoppers. To really drive usage of Amazon for food and groceries, it will be important to provide shoppers with confidence that they can get the same or a better range and quality of fresh products on Amazon as they currently get from other online grocery retailers.
Morrisons, as the second largest fresh food manufacturer in the UK, will help to drive Amazon’s credentials in fresh food retailing. Its vertically integrated structure provides a key point of difference as it supports its ‘Market Street’ concept and as it helps drive high levels of availability, traceability and flexibility, enabling the retailer to respond quickly to changing shopper preferences.
Our quarterly online tracking data shows that product quality is the second most important factor online shoppers take into consideration when choosing between different online grocery retailers. Additionally, nearly three quarters (73%) of online grocery shoppers say a retailer’s range of fresh products is extremely or very important when choosing where to shop online.
Online grocers still have a way to go to assure shoppers about the quality and freshness of products online. It’ll be important to provide reassurance to shoppers that they are not penalised through insufficient shelf-life. Confidence in online grocery shopping can be increased by:
Demonstrating that picking staff are fully trained on the fresh food requirements of online shoppers
Providing testimonials from satisfied shoppers
Allowing online shoppers more opportunities to state their product preferences should help to reassure shoppers they can pick the same items as they can in-store e.g. differing levels of ripeness of fruit or veg or different thickness of cuts of meat
With the online grocery market set to remain the fastest growing grocery sector over the next five years, are you investing to maximise this opportunity? Understanding the online grocery shopper will be key to identifying how you can win in this high growth channel. We talk to 1,000 British online grocery shoppers on a quarterly basis to understand how behaviour in this channel is evolving and how the industry can continue to deliver for shoppers. Take a look at IGD’s latest online grocery shopper research here.