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Amazon-Morrison to Expand Prime Delivery Services in U.K.

Zacks Equity Research

Amazon AMZN is leaving no stone unturned to strengthen presence in the European grocery space on the back of robust delivery system and the Prime program.

Reportedly, the e-commerce giant and Morrison Supermarkets intend to boost footprint in the U.K. grocery market and strengthen their alliance that initiated three years ago.

Notably, the companies are looking to roll out their service — Morrisons at Amazon — which delivers online ordered goods from Morrison through Amazon’s Prime Now delivery services in cities like Glasgow, Scotland, and Liverpool, England.

The service is currently available or Prime Now customers in Birmingham, Manchester, Leeds and some parts of London.

The service will be introduced in other cities like Newcastle, Sheffield and Portsmouth this year and other locations will be added in the upcoming years.

Morrisons at Amazon also comes with an option for delivery within an hour of the order being placed in some locations.

All these endeavors are likely to drive the companies. Morrison’s customer reach will expand in more cities.

Amazon’s Prime adoption rate will increase, which will boost the top line.

U.K. Holds Prospects

Prime is the key catalyst for Amazon’s aggressive expansion in the U.S. grocery space owing to fast and efficient grocery delivery services. The company’s recent move indicates its efforts to capitalize on the same concept in the U.K. grocery market.

Per a report from IGD, the U.K. food and grocery market is anticipated to reach £218.5 billion by 2023 at a CAGR of 14.8% from 2018 to 2023.

The same report suggests that grocery shopping via online channel is expected to witness strong growth in the U.K. within the same time frame.

We believe that Amazon is well poised to reap benefits from this market on the back of Prime.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote

 

Growing Focus on European Grocery Market

The latest partnership extension of Amazon with Morrison bodes well for its focus on the European grocery space.

Apart from this initiative, the company teamed up with Casino Group’s subsidiary — Monoprix — last year, which enables it to offer its food products and other grocery items via Prime Now app to customers in Paris and its suburbs.

Per latest talks, Amazon is willing to expand its grocery delivery service in France on the back of its Monoprix partnership.

Amazon continues to focus on gaining a competitive edge against Alphabet’s GOOGL Google that is bolstering footprint in the European grocery space.

Google has teamed up with French grocery retailer — Carrefour. Per the terms of the partnership, Carrefour’s products will be sold online via Google’s new shopping site, a product of its search engine, in France. Additionally, the customers will be able to shop using their voice with the help of Google Assistant and Home speakers.

Nevertheless, Amazon’s strategic partnerships, Prime and fast delivery services will boost its position in the European grocery market. Further, these are expected to pose threats to the local grocers as well as international players like Walmart WMT.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #3 (Hold).

A better-ranked stock in the retail-wholesale sector is IAC/InterActiveCorp IAC, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for IAC/InterActiveCorp is pegged at 20.45%.

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