Amazon‘s online grocery service Amazon Fresh is selling some products up to 19 per cent cheaper than major supermarkets, new research suggests.
The cost of a shop from Amazon Fresh turned out to be 11 per cent cheaper than the same online shopping from Tesco, 12 per cent cheaper than Ocado, 15 per cent cheaper than Morrisons and 19 per cent lower than Sainsbury’s.
The research, carried out by consultancy Oliver Wyman, used a price-checked basket of 50 different items to compare the cost of a shop from Amazon Fresh versus the cost of the same products sold online by big British grocers.
Amazon Fresh was launched in the UK only last year, although it has been operating in the US since 2007
Amazon Fresh, which delivers to 302 postcodes across London, Hertfordshire and Bedfordshire, had some of the best prices in branded products, according to research.
For example, the selling price of a 350 gram block of Cathedral Mild Cheddar was £2 on AmazonFresh, compared to £2.50 at Sainsbury’s and Tesco, £3 by Morrisons, and £3.50 by Ocado.
Research also suggests that, if multi-buy or promotions are included, the discount gap rises to between 15 per cent to 25 per cent.
It comes as a blow to grocers, which are just starting to see sales grow again now as they struggle to fend off competition from German discounters Aldi and Lidl.
Tesco, Sainsbury’s and Morrisons have all posted rising festive sales this week, although much of the improvement is linked to higher food inflation.
Amazon Fresh, which is a service available only to customers with an Amazon Prime membership, was launched in the UK only last year, although it has been operating in the US since 2007.
Amazon Fresh also has supply deals with Morrisons and north of England-based supermarket chain Booths. That means it offers a selection of the two supermarkets’ products for sale on its website.
The selling price of a 350 gram block of Cathedral Mild Cheddar was £2 on AmazonFresh, compared to £2.50 at Sainsbury’s and Tesco, £3 by Morrisons, and £3.50 by Ocado
Oliver Wyman retail partner Nick Harrison said Amazon Fresh was still relatively small but the internet giant had ‘very serious’ ambitions in the grocery sector, suggesting that it may be looking at acquisitions.
‘It’s obviously not beyond the bounds of possibility that they would start buying grocers in other parts of the world to do the same.’
He added that Amazon had the benefit of taking a long-term perspective in drawing new customers and was happy ‘not to make money for quite a while’ when growing a new business.
While the rise of AmazonFresh is expected to result in UK supermarkets reviewing their online prices and delivery charges, Harrison said competition from Amazon is unlikely to kill the high street chains.
‘I don’t believe in the end of store-based food retail, certainly not in the next 10 or 20 years, and that’s one of the reasons Amazon has bought Whole Foods and is branching out into having a physical presence,’ he added.
Speculations that Amazon is looking to take on the Big Four supermarkets were fuelled by its acquisition of posh grocer Whole Foods in August for $13.7billion.