Enabling the US online retail company entrance in the UK grocery industry, the deal opens another front on Amazon’s assault on the GBP 178 billion (USD 247 billion) grocery market, owler.com reports. Amazon will now add fresh and frozen products to its existing offering of packaged grocery goods, setting it up to take on Tesco, Sainsbury’s and Wal-Mart’s Asda, as well as online specialist Ocado, in UK online retail markets.
The tie-up boosted shares of Morrisons, UKs fourth largest supermarket. Since 2013, it has outsourced logistics for its own online food business to Ocado. Morrisons shares rose 5.6%. Those of Ocado fell 9.3% on fears the deal would increase competition and reduce the likelihood that Amazon could one day buy it. Market competitor Tesco’s shares fell by 3%.
The British Retail Consortium predicts that 900,000 retail jobs could be created by 2025 as the industry moves online. The Morrisons tie-up stops short of replicating its broader US Amazon Fresh service, which offers about 20,000 chilled, frozen and perishable products and items from local shops that analysts have long speculated Amazon was targeting for the UK.
But it gives Amazon a platform to enter UK online grocery market predicted to nearly double to GBP 17.2 billion by 2020, according to industry research group IGD, the source cites.
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