Sainsbury’s has become one of the first UK multiple grocers to move to compete with Amazon – as reported on Friday by Reuters
There are some fundamental issues around this strategy. One company I would not have a price war with is Amazon!
Amazon traditionally operate on around a 15% margin from suppliers. Not all categories work within this margin structure but in comparison with UK retailer margins of between 30-40% a price war at this level would only suggest one winner.
Some interesting stats within this report though also point to a doubling of the online grocery market by 2020
Britain’s online food market is expected to nearly double to 17.2 billion pounds in the five years to 2020, according to industry research group