Food and fulfilment key as Amazon keeps rising in UK
Amazon’s UK retail revenue is set to rise 58.2% over the next five years to reach £15.7 billion by 2024, according to GlobalData. And the Jeff Bezos-driven juggernaut will account for one fifth of UK online spend by that date.
The food and grocery sector is anticipated to be the largest growth area for the US company, up 174.7% between 2019 and 2024, in comparison to the total grocery sector which is forecast to grow by 15.5% over the same period.
James Yacoub, Retail Analyst for GlobalData, comments: “Although food has not historically been a focal point for the pureplay, it will prioritise investment in this sector through ramping up its Amazon Fresh operation, developing Whole Foods and introducing its checkout-free Amazon Go stores. Overall, it will grow its total online market share to 19.8% in 2024, up from 16.6% in 2019.”
Amazon will aim to gain more control over its distribution network by investing in more fulfilment centres, transport vehicles and automation, helping it to streamline its operating expenses in the long run. Its acquisition strategy is evidence of this – in 2019 Amazon demonstrated vertical integration through its purchase of robotics company Dispatch which specialises in autonomous vehicles, robotics and artificial intelligence.
Yacoub concludes: “Amazon has invested in the latest thematic trends in retail from the onset of its growth, with a particular focus on its delivery infrastructure, artificial intelligence and automation. Prime’s success has been made possible by Amazon’s focus on last mile fulfilment, and 19.4% of UK online shoppers are now Prime subscribers. Amazon will continue to optimise its efficiency in its last mile delivery which remains to be the most costly aspect of fulfilment.”