Amazon AMZN recently extended its partnership with Morrisons in a bid to bolster its grocery drive in the U.K.
On the back of the latest move, the e-commerce giant is making Morrisons full range available to customers on Amazon.co.uk. Notably, this facility is accessible to only Prime members.
Further, the Prime members will be able to avail free same-day delivery service across various grocery categories such as baked items, seafood, meat, vegetables and fruits among others for orders exceeding 40 pounds. There will be a delivery charge of 3.99 pounds for orders worth less than 40 pounds.
We note that the deal is likely to expand the company’s ‘Morrisons at Amazon’ service further. The service has been already introduced in Leeds and parts of northern England. Furthermore, it will be made available across the country in the coming weeks.
Additionally, Amazon’s e-commerce horizon will expand in the U.K. with the aid of the latest full range offer.
Move to Benefit
The latest move of Amazon holds promise amid the ongoing coronavirus pandemic, which has spurred demand for e-commerce, especially for categories like online grocery shopping.
Spike in online orders has been driving Amazon’s online retail business since the onset of this pandemic. This in turn, is bolstering the company’s investors momentum.
Notably, Amazon has returned 76.5% on a year-to-date basis, compared with the industry’s rally of 59.1%.
According to a report from GlobalData, the online food and grocery retail market of the U.K. is expected to register growth of 25.5% in 2020.
Amazon is well-poised to capitalise on the immense growth potential present in this particular market on the back of its expanding ‘Morrisons at Amazon’ service.
Moreover, the company’s solid momentum across Prime program on the heels of ultrafast delivery services and robust content portfolio will strengthen presence.
Intensifying Competition
We believe Amazon’s strengthening partnership with Morrisons will continue to play a significant role in its grocery growth plan in the European market.
Apart from tie-up with Morrisons, the company’s partnership with Casino Group’s subsidiary —Monoprix, which enables it to offer its food products and other grocery items via Prime Now app to customers in Paris and its suburbs, remains noteworthy.
Growing grocery endeavors of Amazon are likely to aid its competitive position against companies like Alphabet’s GOOGL Google and Walmart WMT, which are also trying to expand their presence in the European grocery market.
Notably, Google has tie-ups with French grocery retailer —Carrefour. Further, Walmart owns a supermarket retailer namely Asda.
Moreover, Amazon’s aggressive efforts in online grocery are expected to give a tough competition to supermarket retailers including Tesco, Sainsbury’s and Waitrose.
Zacks Rank & a Stock to Consider
Currently, Amazon carries a Zacks Ranks #3 (Hold).
A better-ranked stock in the retail-wholesale sector worth considering is JD.com JD, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for JD is currently pegged at 46.79%.
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