Amazon has announced the launch of its Amazon Fresh grocery home delivery service in northern and central districts of Hamburg. The launch makes Hamburg the second German market for the service, which started in Berlin and Potsdam in May.
Prime Fresh members can select from more than 300,000 items for same-day delivery, with a minimum order value of EUR40. The product selection includes around 100,000 fresh, frozen and ambient grocery items and an expanded assortment of around 200,000 non food items across categories such as kitchen, sport and stationery. Local brands including J.J. Darboven coffee, Fritz lemonade and Astra are included and marketplace sellers at launch include Basic, Kochhaus and Lindner Esskultur.
Amazon Fresh Director Florian Baumgartner commented: “The positive feedback of customers in Berlin and Munich has shown us that they highly value the combination of our huge product selection, flexible delivery options and good prices.” He said that the company had significantly expanded its product selection for Amazon Fresh since launch and expected to continue to do so.
Just two and a half months after launching into the German market, Amazon Fresh is already in its second German city. And Munich, where Amazon has been preparing to launch the service for some time, is likely to follow soon. The evidence is that Amazon likes the potential it sees so far from its largest international market.
As it continues to expand, Amazon Fresh is making tweaks to the service based on its own insight and feedback from customers. Launching in Berlin and Potsdam in May, Amazon Fresh had an assortment of 85,000 items. This subsequently expanded to 100,000. Now in Hamburg the service boasts 300,000 SKUs including two thirds non-food. Adding frequently purchased non-food items is a smart move by Amazon to increase basket size and subsidise its low grocery margins. Similarly the Amazon Fresh service in London has also expanded from 130,000 to 180,000 items and added three same-day delivery cut-off points from two previously.
Still, for now Amazon Fresh remains small and faces challenges ahead, not least of which will be persuading shoppers to sign up for the monthly EUR9.99 Prime Fresh subscription on top of their existing Prime membership. Aggressive pricing is one way that the retailer is looking to do this in the short term, in addition to its superior service levels. A study by Profitero in the UK this month revealed that Amazon Fresh priced items lower than the Big Four retailers in 50-61% of cases across a sample of 600-700 items, posing a direct challenge to the leading grocery retailers.
By teaming up with DHL as its logistics partner in Germany, Amazon has scope expand rapidly to other major cities where it could establish some early mover advantage, including Munich, Hannover, Stuttgart, Frankfurt, Cologne, Duesseldorf, Leipzig and Dresden. We can be sure that Amazon will employ an agile strategy, making tweaks and changes along the way. Also we can be certain that wherever it goes it will leave a trail of disruption in its wake as bricks and mortar as well as online competitors scramble to respond.