UK Amazon: Influence and Ambition in the Grocery Sector Market Report 2021
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Report Summary
“As the online retail market leader, Amazon was in a better position than most to capitalise on the heightened online demand that COVID-19 has brought. It has certainly done so, growing at its fastest pace since 2013, and being viewed as an essential service during the pandemic by a majority of its shoppers. However, the pandemic has also highlighted some underdevelopment in its UK operation, namely in the grocery sector – the quickest growing market in 2020 and one that Amazon only plays a small part in currently.”
– Nick Carroll, Associate Director of Retail Research
This report covers the following issues:
- The impact of COVID-19 on Amazon and additional use of the retailer by consumers
- The operations of Amazon in the UK and globally, including key innovations in the past year
- Key demographic groups for Amazon, including most frequent shoppers
- Amazon Prime membership and Amazon services use
- Non-food purchasing via Amazon
- Food and drink purchasing via Amazon
- Interest in shopping in a physical Amazon grocery store
Table of Contents
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Overview
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- Key issues covered in this Report
- COVID-19: market context
- Economic and other assumptions
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Executive Summary
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- Impact of COVID-19 on online retailing and Amazon
- Figure 1: Short-, medium- and long-term impact of COVID-19 on online retailing, January 2020
- Amazon: the business
- COVID-19 drives the fastest growth in sales since 2011 for Amazon
- Figure 2: Amazon, total net sales, 2014-20
- …helping the business hit record profits
- Figure 3: Amazon profits, 2016-20
- The UK is Amazon’s fastest growing core region in 2020…
- Figure 4: Geographic breakdown of Amazon revenues, 2018-20
- …taking Amazon to a record market share in the UK market
- Figure 5: Amazon: share of the UK online retail market, 2017-2020
- Amazon opens its first supermarket
- Figure 6: Amazon Fresh grocery store Woodland Hills, August 2020
- The consumer
- A third of Amazon shoppers have used the retailer more as a result of COVID-19
- Figure 7: Change in Amazon use due to COVID-19, October 2020
- Most categories see a boost to purchasing in 2020
- Figure 8: Non-food products purchased via Amazon in the past year, October 2020
- Prime also sees a boost…
- Figure 9: Amazon Prime membership and access, October 2020
- …helped by growth in use of Prime Video
- Figure 10: Amazon services regularly used, October 2019 and 2020
- Ambient central to Amazon’s influence in the grocery sector
- Figure 11: Types of food and drink purchased via Amazon in the past year, October 2020
- Rapid-delivery key to Amazon’s success in the online grocery market
- Figure 12: Attitudes towards Amazon, October 2020
- Three quarters would shop at an Amazon grocery store
- Figure 13: What would drive use of an Amazon grocery store, October 2020
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Issues and Insights
- COVID-19 and Amazon: significant opportunity and heightened competition
- Amazon’s current influence on the grocery sector…
- …and future ambitions
- COVID-19 and Amazon: significant opportunity and heightened competition
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Amazon Structure and Innovations – Key Takeaways
- COVID-19 drives significant growth for Amazon’s core retail operations
- The UK is Amazon’s fastest growing core region in 2020
- Amazon makes notable moves in the grocery and pharmacy sector
- COVID-19 drives significant growth for Amazon’s core retail operations
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Amazon: An Overview
- COVID-19 drives the quickest growth for Amazon since 2011
- Figure 14: Amazon, total net sales, 2014-20
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- Figure 15: Amazon quarterly net sales growth, by major business area, 2019-20
- Retail grows its share of the Amazon business in 2020
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- Figure 16: Amazon net sales breakdown, 2020
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- Figure 17: Breakdown of Amazon net sales by business segment, as a % of total sales, 2016-20
- Despite significant costs, COVID-19 drives record profits for Amazon
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- Figure 18: Amazon profits, 2016-20
- COVID-19 drives the quickest growth for Amazon since 2011
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Amazon: In the UK Market
- Amazon revenues in the UK skyrocket in 2020
- Figure 19: Geographic breakdown of Amazon revenues, 2018-20
- Online-only players have not had it all their own way in 2020
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- Figure 20: All UK online retail sales, share of sales by type of retail operation, 2016-2020
- Amazon grows its share of the online market in 2020
- Figure 21: Amazon reported sales and gross transactional revenues as a % of all online sales, 2016-20
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- Figure 22: Amazon: share of the UK online retail market, 2017-2020
- Electricals the single largest category for Amazon
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- Figure 23: Estimated breakdown of Amazon UK GTV sales by product, 2020
- Amazon revenues in the UK skyrocket in 2020
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Amazon: Launch Activity and Innovation
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- Amazon’s first supermarket
- Figure 24: Amazon Fresh grocery store Woodland Hills, August 2020
- Figure 25: Amazon Fresh grocery store Woodland Hills, seafood counter, August 2020
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- Figure 26: Amazon Dash Cart, August 2020
- In the UK Amazon expands its partnership with Morrisons
- Ramping up private label
- Figure 27: Amazon.com North America new product development, total product launches, Jan 2017-Dec 2020
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- Figure 28: Amazon Fresh and Amazon Kitchen products, June and September 2020
- Figure 29: Happy Belly products, August and October 2020
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- Figure 30: Solimo product launches, November, August, June 2020
- Moving into new areas
- Figure 31: Amazon Pharmacy packaging, November 2020
- Tackling the negatives of marketplace
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- Figure 32: Amazon Transparency, September 2020
- Ethical Amazon
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- Figure 33: Climate Pledge Friendly certifications, October 2020
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Advertising and Marketing Activity
- Advertising spend up 14.4% year-on-year in 2020
- Figure 34: Amazon (UK) Ltd: total above-the-line, online display and direct mail advertising expenditure, 2016-20
- Big push behind Prime Video as the battle for streaming viewers intensified during COVID-19 lockdowns
- Figure 35: Amazon (UK) Ltd: total above-the-line, online display and direct mail advertising expenditure by advertising category, 2016-20
- Focused on digital marketing
- Figure 36: Amazon (UK) Ltd: total above-the-line, online display and direct mail advertising expenditure by media type, 2016-20
- Nielsen Ad Intel coverage
- Advertising spend up 14.4% year-on-year in 2020
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The Consumer – Key Takeaways
- COVID-19 drives significant growth from Amazon
- Prime grows, and is more integral to Amazon than ever before
- Amazon’s influence in the grocery sector is small, but primed for significant growth
- COVID-19 drives significant growth from Amazon
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Impact of COVID-19 on Amazon
- Pandemic drives rapid online growth
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- Figure 37: COVID-19 Tracker: impact on online shopping and behaviour in-store, April-December 2020
- Over a third of Amazon shoppers have used the retailer more due to COVID-19
- Figure 38: Change in Amazon use due to COVID-19, October 2020
- Amazon seen as essential during the pandemic
- Figure 39: Attitudes towards Amazon and COVID-19, October 2020
- A greater focus on online will bring opportunities in categories of focus…
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- Figure 40: In-store clothing shopping during COVID-19, August 2020
- …and greater competition
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- Figure 41: Attitudes towards Amazon during the COVID-19 pandemic, October 2020
- Pandemic drives rapid online growth
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Who Shops and How Frequently with Amazon
- Nine in ten shopped with Amazon in the past year
- COVID-19 drives greater frequency of Amazon use
- Figure 42: Frequency of Amazon shopping, October 2019-20
- Younger shoppers most frequent Amazon users
- Figure 43: Frequency of Amazon shopping, by age, October 2020
- COVID-19 drives greater frequency of purchase among older groups
- Figure 44: Frequency of Amazon shopping, by age, October 2019 and 2020
- Nine in ten shopped with Amazon in the past year
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Amazon Prime Membership
- Half of consumers now have access to Amazon Prime
- Figure 45: Amazon Prime membership and access, October 2020
- Almost a quarter have signed up to Prime in the past year
- Figure 46: Length of Amazon Prime membership, October 2020
- Nearly two thirds of 16-34s have access to Prime
- Figure 47: Amazon Prime membership and access, by age, October 2020
- Half of consumers now have access to Amazon Prime
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Amazon Services Used
- Delivery still the main draw, but Video also key
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- Figure 48: Amazon services regularly used, by type of access to Amazon Prime, October 2020
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- Figure 49: Repertoire of Amazon Prime services used regularly, by age, October 2020
- COVID-19 drives significant use of services, particularly among younger consumers
- Figure 50: Amazon services regularly used, October 2019 and 2020
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- Figure 51: Key Amazon Prime services used, by age, October 2019 and 2020
- Delivery still the main draw, but Video also key
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Devices Used to Shop With Amazon
- App usage grows in 2020
- Figure 52: Methods used to shop with Amazon in the past year, October 2019 and 2020
- Younger shoppers just as likely to use the Amazon app as any other method
- Figure 53: Methods used to shop with Amazon in the past year, by age, October 2020
- Younger shoppers also most likely to use multiple devices
- Figure 54: Repertoire of devices used to shop with Amazon in the past year, October 2020
- App usage grows in 2020
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Non-food Purchases via Amazon
- Most categories see a boost to purchasing in 2020
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- Figure 55: Non-food products purchased via Amazon in the past year, October 2020
- Prime boosts purchasing levels across all categories
- Figure 56: Non-food products purchased via Amazon in the past year, by Prime membership status, October 2020
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- Figure 57: Non-food products purchased via Amazon in the two years, by Prime membership status, October 2019 and 2020
- Repertoire of Amazon purchases grows
- Figure 58: Repertoire of products purchased via Amazon in the last year, October 2019 and 2020
- Most categories see a boost to purchasing in 2020
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Food and Drink Purchases via Amazon
- Amazon’s slow build of influence in the grocery sector
- One in ten buys food/drink from Amazon
- Figure 59: Food and alcoholic drink purchasing via Amazon in the past year, October 2020
- Speed is crucial to Amazon’s appeal in the grocery sector
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- Figure 60: Attitudes to buying food/drink from Amazon, October 2020
- Alcoholic and food cupboard central to Amazon’s influence in the grocery sector
- Figure 61: Types of food and drink purchased via Amazon in the past year, October 2020
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- Figure 62: Food and drink purchased via amazon in the past year, by age and socio-economic group, October 2020
- Fresh lags behind in terms of interest among those who have yet to buy food and drink from Amazon
- Figure 63: Interest in future food and drink purchases from Amazon, October 2020
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- Figure 64: Attitudes to hygiene and buying fresh food via Amazon, by age, October 2020
- Amazon’s slow build of influence in the grocery sector
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Interest in a Physical Amazon Grocery Store
- Rumours of a physical entrance to the UK grocery sector persist
- Over three quarters of shoppers would be interested to shop at an Amazon grocery store
- Prime could be the differentiator
- Figure 65: What would drive use of an Amazon grocery store, October 2020
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- Figure 66: What would drive use of an Amazon grocery store, by age, October 2020
- Rumours of a physical entrance to the UK grocery sector persist
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Appendix – Data Sources, Abbreviations and Supporting Information
- Data sources
- VAT
- Financial definitions
- Abbreviations
- Consumer research methodology
- Data sources
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