Amazon has launched its biggest foray into food outside of the United States in a deal with British supermarket Morrisons offering fresh and frozen goods to customers.
Enabling the online retail giant to compete with Britain's biggest supermarket stores and smallest local shops, the deal marks Amazon's latest assault on a British market already buckling under the weight of fierce competition and rapid online growth.
Amazon will now add fresh and frozen products to its existing offering of packaged grocery goods, setting it up against established online rivals Tesco and Ocado in Britain's advanced online retail market.
"The advance of Amazon as a participant in UK grocery is a potential challenge to the whole trade," Shore Capital retail analyst Clive Black said on Monday.
"Any new entrant is, but particularly the American behemoth."
The tie-up boosted shares of Morrisons, Britain's fourth biggest supermarket, which had been a laggard in online sales.
Since 2013 it has outsourced logistics for its own online food business to Ocado, a British, purely online, grocery retailer.
Morrisons shares rose by five per cent. Those of Ocado fell 10 per cent on fears the deal would increase competition and reduce the likelihood that Amazon could one day buy the British online firm.
Market leader Tesco's shares fell by three per cent.
"Tesco could soon be about to find out what it's like to be David rather than Goliath," Retail Vision consultant John Ibbotson said.
Amazon launched delivery of fresh food in Seattle in 2007 and has moved to a handful of other US cities since then.
Its expansion into food in the rest of the world has focused, so far, on packaged goods, due to the complexity of delivering fresh and frozen products, but it is seen as keen to extend its food offering.
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