By Emma-Jane Steele Director, Shop +, Mindshare
Amazon recently announced the launch of its grocery delivery service in the UK, Amazon Fresh. It will provide one-hour time slot grocery deliveries between 7am and 11pm, seven days a week to Amazon Prime members (£79.99 subscription). After operating in the West and East coast of America since 2007, Amazon has now opened its service to London.
Details & Implications
The move by Amazon certainly steps up the pressure on the traditional big supermarkets already locked in a brutal price war. Amazon will partner with UK Supermarket Morrison for support on back end logistics as well as supplying the more commodity based items. However, the majority of Fresh items will be branded goods as well as independent locally sourced products. Selecting London as the first market outside of the US was a strategic move from Amazon. It is estimated Amazon could eventually take up to 13% of all food sales in the UK. Amazon.com has fast growing market share in many markets, including India, Germany, Mexico and Japan, it is also setting its sights on Australia. Global Prime membership increased by 51% last year, with an estimated user base of 285M, the future opportunity for Amazon is to leverage this existing customer base outside of the UK and US and convert them into Fresh customers when/if they launch.
From a marketing point of view, the launch of Fresh helps complete an ever-growing Amazon ecosystem. Marketers can now leverage the different Amazon platforms (Pantry, Fresh and .com) as well as the consumer touch points (Fire TV, Kindle, Search, Display, Alexa) to drive the full consumer experience. The brand to demand synergy Amazon has created will differentiate them from the other grocery players. Therefore, although it’s still early days for Fresh (the service is only available in 69 London post codes), its ability to engage with consumers at a much higher level of the purchase funnel - driving the consumer from initial engagement, to research, through to purchase, within the same environment will be a very enticing thought for brands. This is yet another example of the crumbling wall between marketing and sales and how Amazon is maneuvering itself to pick up the profitable pieces from the blurring of lines.
Overall, it’s important for brands not to ignore this move by Amazon. Despite a slow roll out and still operating across a selected region in the US and UK, Fresh users and markets will only continue to grow and impact the online grocery delivery market in a crucial way. Not only do brands need to approach Fresh as part of an Amazon wide strategy, but also as a new channel to market in helping achieve strategic e-commerce business objectives.
Brands looking to integrate with Fresh need to first consider the retail fundamentals. Get the basics right and have all the potential products available on the platform. This way, you can start to learn what customers are searching and buying organically. It is essential to approach the initial stages of integration in an adaptive way. Often during this launch period, due to no historical demand insight it’s difficult to project the level of stock required. Therefore, out of stock can often happen during the first few Fresh campaigns. Thus, campaigns that also drive to .com, Fresh and/or Pantry landing pages are a best practice. This adaptive cross platform approach will also make it easier to scale success. It also allows brands to see varying insights (e.g. the types of targeting segments that engage with each platform may be different, which could drive real time creative/targeting tweaks). Creative integration is fundamental in ensuring the marketing activity feels native to the environment. To date, the best performing creative is one that integrates the brand’s look and feel with Fresh’s. Unlike advertising on Amazon.com where brands focus on one product, brands wanting to experiment with Fresh should choose a few related brands to promote.