Dive Brief:
- The head of Amazon France told newspaper Journal du Dimanche that it aims to launch its grocery delivery service in the country, but did not offer a timetable or potential partners in this effort, according to Reuters.
- French supermarket Systeme U has publicly stated that its discussing a possible grocery supply deal with Amazon, but no agreement has been announced. Amazon had reportedly reached out to a handful of French supermarkets this past fall, exploring acquisitions and partnerships.
- Amazon has been slowly building its presence in France in recent years. Although met with some government resistance, the e-commerce giant was able to successfully launch its Amazon PrimeNow express delivery service in Paris in 2016.
Dive Insight:
By expanding into France, Amazon could gain valuable insights from a more advanced online grocery shopping market, and then apply them back home in the U.S.
France has one of the world's highest grocery e-commerce penetration rates, estimated at more than 7% of total sales, according to Kantar Worldpanel. It was an early adopter of click-and-collect, and is seeing home delivery expand. Its ‘Drive’ model has been picked up by most major grocers and is used by close to 25% of the country’s households, according to a report from Kantar.
Amazon, meanwhile, has struggled to expand its grocery e-commerce footprint at home. Its purchase of Whole Foods will boost its online grocery efforts considerably, but up until now its AmazonFresh service, established more than a decade ago, has expanded to just a handful of cities and recently scaled back its coverage in ten states.
Amazon will need to improve its Fresh service if it hopes to battle competing grocers as well as pure-play options like FreshDirect and Peapod. Reports just last month indicated the online giant may be consolidating its Fresh and Prime Now systems.
In addition to gaining valuable consumer insights, Amazon may learn more about the store pickup model, which many analysts believe it will eventually add to its e-commerce offerings through Whole Foods. The Drive model utilizes special pickup hubs in addition to stores, cutting down the distance between consumers and their orders. Amazon is currently testing dedicated pickup hubs in Seattle, and could hone those outlets before expanding them to other U.S. cities.
Amazon will face its share of challenges if and when it moves into grocery delivery in France. There will be logistic issues, such as finding a partner or grocer to acquire to fill orders and distribution centers. The e-commerce retailer will also likely face cultural backlash from officials who view Amazon as robbing the country of its heritage and identity. In 2013, France’s culture minister said Amazon was a “destroyer of bookshops” and passed a law that banned online retailers from shipping books for free (Amazon, in response, charged just one cent). Amazon’s new move into grocery delivery could be seen as an attack on France’s many charming independently owned small grocery stores.
The advantages of a move abroad, however — both in terms of building scale and insight — will outweigh any headaches Amazon might face.