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Amazon Enters Online Grocery Market

Amazon Enters Online Grocery Market

Amazon, the world's largest online retailer, who usually drives literacy lovers to its doors for books and DVDs, is the newest grocery store on the online supermarket block.

Amazon.co.uk announced yesterday that it was to go head to head with supermarket giants, Tesco, Sainsbury's, and Asda with the launch of an online grocery store offering "free delivery on thousands of great value household, niche, ethnic and international products."

Over in the US Amazon has already entered the online grocery market. It launched Amazon Fresh in the US as a test project in 2007, but has limited its deliveries to its home town of Seattle. This month, the group also started selling food and drinks online through its German site.

Amazon.co.uk is to offer a range of 22,000 products, which matches the scope of rivals including Tesco and Ocado. At its launch it talked of bringing brands including PepsiCo, Nestle , Kraft , and Proctor & Gamble to its British customers. A few of the "everyday favourites" it picked out included Ariel washing powder, Carte Noire coffee, Pampers nappies and Walkers crisps. Goods on sale will also include a large selection of international and specialist items including organic, kosher, gluten free, sugar free and vegan ranges. Customers will also be able to shop via their computers or their smart phones. Alternatively, iPhone and iPod touch users can download the Amazon app.

Planet Retail, research analyst, Natalie Berg, said: "This is big news in the online market. When the world's largest online retailer makes a play it is bound to shake a few things up." She added: "We have seen supermarkets move into selling DVDs and books. This is the first time it has happened the other way around."

Amazon will be stocking 2,000 products at its five warehouses around the UK, processing orders in all of Amazon UK's "fulfilment centres" in Milton Keynes, Swansea, Glenrothes, Gourock, Peterborough and Doncaster. The remaining products, including fresh and chilled items, will be sent from outside suppliers.

James Leeson, the head of grocery at Amazon.co.uk, explained why the company had made the surprise leap into taking on the supermarkets. "Amazon.co.uk's aim is to be the place where customers can find and discover any product they want to buy online, and with the introduction of this new store there are thousands of household, niche, ethnic and international grocery items," he said.

He added the company had learnt from its experience of selling groceries in the US and would work to increase the selection of items available as, he noted, the company has "unlimited virtual shelf space."

Arden Partners', senior retailist, Nick Bubb said: "The group has consistently moved into new areas, and people who buy books and DVDs from the site would probably trust them with some groceries. It will definitely take some of the market."

Amazon's growth has been astounding over the past 10 years and total global sales rose 28 per cent last year to $24.5bn (£16bn), 10 times higher than in 1999. It has expanded from book sales to clothing, electronics and toys, to DIY tools and car accessories.


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