Amazon takes over groceries with "free" home delivery

Supermarkets faced a new challenge today after online giant Amazon announced that Prime customers could now have their grocery delivered for free.

Customers using the company's £ 1.17 billion subscription service can now have groceries delivered straight to their door without leaving their couches.

It replaces the previous system, where Prime members – who already had to pay £ 7.99 – had to pay an additional £ 2.99 for a grocery order.

As long as customers are in London and the South East – including Surrey, Hampshire, Hertfordshire and Bedfordshire – and spend more than £ 40 on fresh orders, their groceries will be delivered free of charge.

The U.S. e-commerce giant also plans to expand free delivery to millions more customers across the UK by the end of the year and accelerate deliveries to take advantage of the booming online food industry.

Prime customers in Birmingham, Manchester and Edinburgh are expected to be among the first to benefit from the broader rollout.

Due to the enormous surge, current warehouses – also known as fulfillment centers – are being adapted and expanded so that the food from suppliers can be stored safely before it is delivered to buyers.

This means that suppliers, including bakers and butchers, have their goods transported to the hubs so that Amazon can sell them themselves.

The same applies to all supermarkets that opt ​​for the ambitious new system.

A spokesman for Amazon told MailOnline that Amazon Fresh will deliver groceries from Morrisons, Whole Foods Market and Booths, as well as smaller suppliers such as GAILs Artisan Bakery, C.Lidgate and Paxton & Whitfield.

However, groceries from "nervous" supermarkets like Tesco, Sainsbury's and Asda are not being delivered as the US retailer tries to "capture a significant part of the market".

A £ 3.99 shipping fee is now charged for businesses with a price below £ 40. Customers can access 12,000 to 15,000 products online – compared to 40,000 products at Ocado.

Shoppers in 40 postcodes in Surrey and Berkshire can also book a one-hour appointment for £ 3.99 or receive same-day delivery.

How does Amazon Fresh compare to its established competition? MailOnline researched online shopping orders in three supermarkets and compared the results with the online giant to determine the difference when checking out

A worker in one of the new centers is picking a pineapple to deliver the new delivery service

The new fulfillment centers from Amazon Fresh will be housed in retrofitted and expanded buildings

Retail analyst Richard Hyman described Amazon as "an insatiable, ambitious company that wants to dominate every market it trades in."

I speak on BBC On Radio 4's Today show, he added that UK supermarkets will be "justifiably nervous" when Amazon enters the food market.

& # 39; History shows that Amazon does not enter markets lightly and does not enter markets to be a different player. This is an insatiable, ambitious company that wants to dominate every market it trades in, ”said Hyman.

According to Amazon, customers who use the supply network can choose between 12,000 and 15,000 products from a special area on their website

"Now it won't dominate the UK grocery market anytime soon because there are quite a few players out there who are actually pretty good at what they do." But I think we should have no doubt that they will conquer an essential part of this market.

“It is certainly true that someone with bags as deep as Amazon enters the market and their existing retail business model doesn’t have to make a profit because they make their profit with other things, which is a potentially daunting challenge Represents dimensions. & # 39;

He added: "One of the things we have all learned about Amazon over the years is that they are very unconventional and also extremely secret. So there is a lot they didn't tell us. & # 39;

Amazon released its second quarter results on Thursday. Investors, whose share price has risen by around 60 percent this year, hope for further good news from the technology giant. The surge in Amazon stock led founder Jeff Bezos to add £ 10 billion to his fortune in just one day last week.

Since the pandemic started, the size of grocery deliveries has doubled to more than 3 million orders a week as families avoid crowded spaces and learn to shop online.

In traditional supermarkets, market share has already been undercut by German discounters, which hold more than 13 percent of the UK market, and sellers like Ocado and Amazon pose a threat online.

Russell Jones, UK Country Manager at Amazon Fresh said: & # 39; It's a really obvious next step. Food delivery is one of the fastest growing companies on Amazon and we believe this will be one of the UK's most popular prime benefits. & # 39;

Global Data analyst Tom Brereton said: "It's a brave and ambitious move from Amazon."