Amazon To Overtake Tesco To Become UK's Largest Retailer By 2025

Here is the marketplace news that captured our attention this week.

Amazon To Overtake Tesco To Become UK's Largest Retailer By 2025

Amazon's UK is poised to overtake Tesco and become the country's largest retailer by 2025, with gross sales of £77.1 billion, new research by Edge Retail Insight has found.

In 2020, Amazon UK's total sales stood at £36.3 billion, while Tesco reported sales of almost double that, at £64 billion, however, the study predicts that Amazon is set to see a CAGR of 16.3% in the five years between 2020-2025, ultimately overtaking its rival.

Furthermore, Amazon is expected to account for 15% of all UK chain retail sales by 2025, up from 9.1% last year;

Amazon is also expected to become the 15th biggest seller of edible grocery products by the mid part of the decade, overtaking Shell, McColls, BP and Wilko. Amazon UK's edible grocery sales grew 17.6% in 2020, ranking it 19th in terms of the overall grocery landscape..

The blurring of the lines between physical and online grocery retail is also likely to accelerate in the coming years, with retailers striking partnerships with last-mile delivery specialists such as Deliveroo and Uber Eats or developing their own rapid delivery platforms.

Tambo's view:

These bold predictions highlight the growing threat of Amazon to the Big Four grocers and consequently the revenues of many consumer packaged goods (CPG) companies who choose not to sell on the platform. The grocers will remain an important channel, but these brands must prioritise their online strategies to capture growth opportunities, particularly in mature digital markets, like the UK. That means understanding how to convert shoppers online through digital touchpoints, such as marketplaces like Amazon, where many now begin their purchase journeys.

US Amazon Pharmacy offers half-yearly prescriptions

Amazon announced this week it was now offering six-month prescriptions in the US starting at $6 for medications of common health issues through its pharmacy.

Prime members will get additional savings when paying without insurance. Customers can pay as low as $1 per month for select medications, including drugs to treat diabetes and blood pressure, and will get free two-day delivery.

Amazon launched an online pharmacy in November for delivering prescription medications in the United States and stirring up competition with drug retailers such as Walgreens Boots Alliance, CVS Health and Walmart. Amazon is also looking at launching physical pharmacies in the US.

Under the new offering, customers can search for their medication by name and find out if it's eligible for a six-month supply and what the price it will be when using the Prime prescription savings benefit.

Amazon has been trying to enter the pharmacy market since its 2018 acquisition of PillPack, which is a platform used by customers who need pre-sorted doses of multiple drugs.

Tambo's view:

Amazon is providing a faster, easier and more cost effective solution for buying drugs on prescription. The new offering will shake up the industry in the US, where prescriptions are still predominantly collected from pharmacies.

However, Amazon will find it more difficult to penetrate the EU pharmacy market because of regulations and restrictions on who can sell medication . The European Medicines Agency (EMA) will be under pressure from pharmacies and retailers to keep Amazon out of the market.

UK shoppers could spend £1.4 billion on Amazon Prime Day event