upermarkets have been waiting several years for Amazon to make its next move in the UK’s near-£200bn food retail market and it came this week when the American company revealed plans to expand its online grocery service Amazon Fresh. Amazon has already won over millions of Britons with the rapid-fire delivery of books, toys and household essentials to their front door, and coronavirus lockdowns have made it a lifeline for some households. On Thursday, Amazon said global sales jumped 40% to $88.9bn (£66.7bn) in the three months to 30 June, with the world’s most powerful online retailer hungry for yet more growth. Fresh has operated with little fanfare in London and the home counties for several years but the online retailer has promised wider availability by the end of 2020, including in major cities such as Birmingham, Manchester and Edinburgh. To win over shoppers, Amazon is offering the service as a new perk to the estimated 15 million Britons that are paid up members of its Prime membership scheme, which offers extras such as faster delivery and streaming services for a £79 annual fee. “Grocery delivery is one of the fastest-growing businesses at Amazon,” said Russell Jones, country manager, Amazon Fresh UK. “We will keep improving the grocery shopping experience so by the end of the year, millions of Prime members across the UK will have access to fast, free delivery of groceries.” The move is timed to capitalise on new shopping habits forged during the pandemic when many households opted to buy their groceries online for the first time. Ocado recently revealed it had a waiting list of 1 million customers after its automated warehouses struggled to cope with the huge surge in demand. “The world as we know it has changed,” Ocado’s chief executive, Tim Steiner, said at the time, adding that the conditions created by the health crisis meant “years of growth in the online grocery market [were] condensed into a matter of months”. At the start of lockdown, online grocery accounted for roughly 7% of total UK food retail sales, according to grocery market analysts at Kantar. Today that figure stands at 13% . Amazon brought the Fresh service over from the US in 2016 and the following year caused a storm when it spent more than £10bn on organic food chain Whole Foods Market. But instead of going it alone here Amazon has put together its food range through partnerships with homegrown chains including Morrisons and upmarket regional chain Booths. Relationships with the manufacturers of major grocery brands such as Pepsi, Cadbury and Heinz means the Fresh service carries “tens of thousands of products” – a selection comprehensive enough for a weekly shop. But Fresh has a mountain to climb. Amazon currently has just 3% of the UK online grocery market, compared with Ocado’s 14% and Tesco’s more than 30%, according to market researcher Mintel. “Amazon is going to have to work incredibly hard to dislodge people’s loyalty to their existing supermarket,” says Bryan Roberts, an independent retail analyst. “Depending where you live people are either Tesco, Sainsbury’s, Asda or Morrisons shoppers and when they go online are more likely to buy from those retailers because they’re familiar with the range and the pricing and the private label.” He adds: “One of the big things everyone is ignoring is that grocery home delivery is brilliant at the moment but that’s because everyone is at home. Fast forward 12 to 18 months, that isn’t always going to be the case.” Amazon has 14 depots capable of handling groceries around the country and says it has expanded its fulfilment network in key locations to handle the expected customer demand. But analysts think it does not have adequate infrastructure to offer a competitive grocery delivery service nationwide. Yet. Last year, the proposed merger of Sainsbury’s and Asda was blocked by the competition watchdog, which argued that the proposed £7bn deal threatened to push up prices and reduce the choice and quality of products on sale in stores. There has been no deal action since then. Analysts think if Amazon’s chief executive, Jeff Bezos, wants to make waves here it will have to buy an incumbent, with Walmart-owned Asda or Morrisons the most likely targets. “Amazon is probably going to be the next key player in any consolidation in the industry, particularly if, as it as it decided in the USA, that the only real way to move to the right in groceries is to buy a store estate,” says Clive Black, an analyst at stockbroker Shore Capital. “Asda is for sale and the big American private equity firms are looking at it, so we can’t rule that out even though Walmart and Amazon are going head to head in the states at the moment. They also have a formal relationship with Morrisons.” Amazon Fresh’s rivals Ocado Zoom Only available to a limited number of postcodes from a small site in west London (second planned for north London). Choice of more than 10,000 products, minimum order £15, delivery charge starts from £1.99. Sainsbury’s Chop Chop Customers order up to 20 items, via an app, for delivery by bicycle within one hour, for a flat fee of £4.99. Available in selected areas of Birmingham, Brighton, Bristol, Cambridge, Cardiff, Leeds, Liverpool, London, Manchester, Milton Keynes, Newcastle, Nottingham, Oxford, Reading and Sheffield. Morrisons.com Offers same-day grocery service through 40 branches via Amazon Fresh service – only to Prime members. Ocado.com Pre-Covid-19, theoretically possible to get a delivery slot for the next day, but all dependent on availability (and for existing customers only at the moment). Tesco.com Same-day delivery by 7pm if ordered by 1pm, with “same day” plan, but unavailable during Covid-19 lockdown. Sainsburys.co.uk Same-day delivery at a limited number of stores. Orders under £40 will be charged a maximum delivery fee of £9. Minimum order value £25. Waitrose “Rapid” Choose up to 25 items, delivery within two hours. Minimum order £10. Delivery charge £5. Available in a limited number of postcodes.