There are few companies that could ever hope to challenge the might of Amazon. But Tesco is one of them. Which sets up the supermarket’s marketplace launch this week as a potential clash of the titans.
And Tesco is striding into the Colosseum, talking a big game and abandoning the coy, cautious corporate-speak we might have expected. When it reaches full scale, the marketplace will make Tesco.com “a one-stop shop for everything customers need”, the supermarket said plainly.
If that sounds familiar, Jeff Bezos’ initial vision for Amazon was for it to become “the everything store”. Something it’s almost become except, notably, in Tesco’s area of expertise: grocery.
The e-commerce giant is the master of fulfilling consumer electronics of questionable quality, novelty plastic tat and stationery supplies at the lowest price in double-quick time. But food has long been its Achilles’ heel.
It’s a “really important and strategic area for us” CEO Andy Jassy said earlier this year, and the hiring of Tesco lifer Tony Hoggett showed how serious it was. But try as it might, it’s not yet nailed Online grocery – recently withdrawing Amazon Fresh online availability from five UK cities. It hopes its move this week to open up availability of grocery delivery to non-Prime members will shift the dial a little.
Is Tesco bigger than Amazon?
At the same time, Tesco’s efforts on ‘everything else’ haven’t always gone to plan either. The marketplace model is not a new one to Tesco, which in 2012 opened up its non-grocery offering Tesco Direct to third-party sellers. It ceased trading in July 2018, with the company saying there was no prospect of the loss-making concern becoming profitable.
Should Amazon be worried as Tesco takes its second shot at the model?
There were some thinly veiled barbs from Tesco in the announcement. “We want to go big enough that we are a destination – that you have critical mass and credibility in each of those categories,” Peter Filcek, marketplace director at Tesco, told The Grocer.
“But not so big that [shoppers] end up tripping over irrelevant stuff and it becomes a problem and gets in [their] way. Equally, we don’t want to chase a number if it means bringing on sellers that can’t fulfil the promises we make our customers, or that let us down on ongoing compliance, or have problems further down the line.”
In other words: Amazon.com is so big and unwieldy it’s become impossible to find what you actually want, and is full of fake, cheap crap, cough cough.
Amazon’s vast grocery selection
And it’s a fair point. Various studies have shown ‘choice overload’ results in reduced customer engagement and conversion rates. And Tesco’s more closely curated selection of products will avoid consumers having to worry about quality while navigating fake reviews and dodgily Photoshopped product imagery. At the same time, there will be a wide selection – 9,000 marketplace products on launch day, and “increasing quickly over the summer”.
“We’ll go where the customers tell us to go, where the opportunities are,” Filcek said.
Amazon’s Ganesh Rao, vice president, Amazon Fresh International, told The Grocer: “Obviously we’ve got vast, vast selection across millions of items and so customers are coming to Amazon for everyday essentials.”
But Amazon’s biggest boast might be becoming its key weakness. Something Tesco looks ready to capitalise on.
With Clubcard in ascendancy and Prime’s benefits fast eroding, it’s not completely bonkers to predict Tesco toppling Amazon’s reign as the ‘everything store’ in the UK. Are you not entertained? We certainly are.
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