Amazon Fresh has finally reached British shores, launching in 69 central and east London postcodes this week. The online behemoth is providing one-hour delivery slots for fresh food as well as products from a number of artisan food producers in London.

UK Prime customers (who spend £79 per year on their membership) can now fork out an extra £6.99 a month if they want to buy their fresh fruit, veg and meat, as well as their Coca-Cola and Kellogg's Cornflakes from Amazon's supply chain. Shopping through Amazon means they will benefit from one-hour delivery slots between 7am-11pm, seven days a week, and even same-day delivery on orders placed by 1pm.

“The bar in grocery retailing is exceptionally high. The supermarkets and grocers are amongst the very best retailers in the world,” said Ajay Kavan, vice president of Amazon Fresh. “We believe that the key to the long term success of Amazon Fresh is to bring together the low prices, vast selection, fast delivery options and customer experience that Amazon customers know and love."

Amazon partnerships

In February, Morrisons revealed it was teaming up with Amazon to bolster the e-tailer's grocery supply chain. By providing it with a wholesale supply chain service, Amazon Fresh has been able to launch in the UK, offering a wide range of Morrisons ambient, fresh and frozen products.

But as well as quality fresh food from Morrisons and big household brands, Amazon Fresh announced it is also offering customers local food from London producers and shops in locations including Borough Market and Notting Hill.

50 artisan London producers have partnered with Amazon Fresh on launch, including Gail’s Artisan Bakery, C.Lidgate, FishWorks, Paxton & Whitfield, Konditor & Cook, Bad Brownie, Daylesford, Chegworth Valley and Turnips.

Danielle Pinnington, MD at Shoppercentric, believes this local food offering is a clever move by Amazon. "It clearly differentiates from the mainstream grocery retailers, and could hit the mark with London shoppers. It looks like Amazon have done their research, and want to make sure they stand out from the crowd despite being a late starter to a competitive market.”

Paz Sarmah, co-founder of Amazon local food partner, Bad Brownie, told Essential Retail the e-tailer approached him several months ago after discovering his brownies at London's Maltby Street Market.

"Amazon was a great fit for our brand – both of us are focussed on exceptional customer service and they have their operations and logistics more finely honed than pretty much anyone else in the industry, so for us it felt like a great next step," explained Sarmah. "We've always said we want world domination by brownie and what better way to get even more people tasting our decadent brownies than through a powerhouse like Amazon!"

While Sarmah did not reveal how much of a cut Amazon takes, he said he was perfectly happy with the agreed rates, which he believes are in-line with other providers, even though the user-base and potential exposure from Amazon is significantly larger.

"Amazon can do a huge amount of work in getting our brand across to many people let alone managing a complex delivery operation to get our gooey brownies to people in a matter of hours –what's the point of a dry brownie? Other than disappointment?"

He also highlighted how no other grocery provider offers local produce, which may give Amazon an edge. "In today's market customers are increasingly looking at supporting local businesses like ours as demonstrated by the rise in local food markets around London and indeed the UK," he said. "So, for Amazon to offer a truly local element to their offer is completely new and unique at this stage and hopefully should be a compelling point of difference for potential customers looking to support local businesses."

The company – which says it bakes enough brownies every week to reach the top of the Shard – hopes this partnership will help support its future growth.

"Practically speaking we already sell our brownies through multiple channels and in our online store so we hope to take further expansion in our stride," said Sarmah, who has also recently partnered with Notonthehighstreet. "We can only hope to expand this side of the business as it's the fastest and most effective way to distribute our brownies to as many people as we can without a massive transport infrastructure of our own."

Essential Retail also talked to Borough Market about its partnership with Amazon, and was surprised to hear there was none, despite Amazon Fresh featuring the organisation in its press release and giving it a dedicated section on Amazon.co.uk, with a number of 'shops' who trade at the historical site near London Bridge. 

Keith Davis, managing director of Borough Market, the charity which runs the market with over 100 traders, said: “Borough Market is a place to visit, find inspiration, meet people and learn something new. At the moment, Borough Market is not partnered with any delivery operators although some of our independent traders do offer various delivery options for their customers, including online sales and local delivery options. If Borough Market were to look at options for a delivery service in the future, this would be done with our commitment to sustainability at its heart.”

Potential trademark disagreements aside, this clearly gives Amazon an extra weapon to its fresh-food arsenal, while providing local producers with an avenue to online retail.

Local food delivery

Amazon is not the first online service to have enabled local producers to get on the eConmerce bandwagon. Hubbub began in 2008 connecting customers to local food producers around London, using a localised business model.

Hubbub customers purchase groceries online from as many of its participating local food stores as they like. Local shops then pick the orders during quiet times of the morning and they are handed over to a van driver in the afternoon who takes the customer's entire order to their front door by the evening.

The vans essentially become mobile warehouses and bespoke technology built by the company informs the drivers where to meet in a central location and how to switch food from van to van. The general idea is Uber-meets-groceries. The van drivers have a mobile app which tells them what packages need to be in what vehicle, allowing them to keep track of what order is where in the system.

Hubbub's founder and co-CEO, Marisa Leaf, said customers would struggle to build an online basket of independent food from only 50 Amazon Fresh local partners.

"And dig even deeper, you'll probably find their logistics require suppliers to deliver to a central picking-and-packing point that puts the product through more stress, miles and hours than a true local delivery system," she suggested. "Minimising the amount of time that a product is in transit and stays in good condition is a big reason why we hesitate to deliver west London products to east London and vice-versa."

Leaf also said she has been talking to independent traders in the run up to the launch and believes Amazon struggled to get local partners signed up to its new platform.

"Many, many shops turned them down," she said. "A large part of it is simply that Amazon didn't understand how these businesses worked, nor did they necessarily share the same obsession with food quality and customer service. And when you've put your heart-and-soul into a product, service and brand, you would understandably be cautious about who you lend your brand to."

Food delivery boxes

Another disruptor to the way customers do their weekly shop is the rise of food box deliveries. Timo Schmidt, founder of Gousto, welcomed Amazon Fresh into the UK food market.

"I love that Amazon Fresh is entering the market," he explained to this publication. "It will serve as a catalyst to get Brits shopping for food online. The grocery market is worth £170 billion, and only 5% is online. The online channel is growing at 17% p.a. so I expect £8-10 billion in annual revenues to move from the store to the online channel by 2020. That is a seismic shift!"

According to IGD’s ShopperVista service, 29% of British grocery shoppers have used eCommerce in the last month, up from 20% in 2010, while 42% of shoppers claim they could be converted to online shopping. Meanwhile, 40% of shoppers who have previously bought ambient groceries from Amazon said they would consider buying fresh food – up from 33% in 2014.

But Schmidt doesn’t believe his or even Ocado's business will loose out to Amazon. "Instead, the pie will get a lot bigger! But not many companies are building the capabilities to offer outstanding experience as it requires huge focus and conviction. Therefore I'm very excited about our 0% waste rate, shortest led time in the market, lowest price point, and widest selection of meals – good things will happen."

He believes due to Gousto's online user experience and speed of use compared to traditional online grocery shopping, the start-up will enter the mass market in the next five years benefitting from this seismic shift to online grocery shopping.

Schmidt pointed out that Amazon Fresh is launching with 130,000 products and only 50 of Amazon's are from small food producers and local London shops. "That's 0.04% of local food, so I would call this a good PR strategy, but taken together, I think they are going after the mass market (low price, big offering) and not the premium segment."