LONDON — Tesco is launching a one-hour delivery service, a service that will directly compete with American online retail behemoth Amazon.
On Monday, Tesco announced “Tesco Now,” an app-based delivery service that will let customers order from a range of 1,000 products and have them delivered immediately, including fruit, meat, dairy, health, and beauty products.
The “last-mile” logistics and deliveries for the service are being handled by Quiqup, a London-based delivery startup.
It’s a clear rival to Amazon Prime Now, Amazon’s one-hour delivery option — even the names are similar — as Tesco attempts to fight back against Amazon’s steady invasion of the UK market.
Tesco Now is (for now) only available in central London, and deliveries cost £7.99 a pop (or £5.99 for a two-hour delivery).
Tesco dominates the UK grocery market, with a market share of around 28%. But Amazon’s apparently endless ambitions loom in the background, making investors uneasy. Amazon recently acquired US grocery chain Whole Foods in a huge $US13.7 billion (£10.8 billion) deal, a move that gives Amazon its first commercial retail stores. The acquisition sent the stocks of UK supermarkets — including Tesco — tumbling. (Whole Foods has a minor presence with just nine stores in the UK.)
In 2016, Amazon brought its AmazonFresh grocery delivery service to London, its first major step into the UK grocery market.
It has also trademarked the slogan “No Lines. No Checkout. (No, Seriously.)” in the UK — suggesting it is thinking about bringing its experimental checkout-less Amazon Go supermarket to Britain. Doing so would open a massive new front in the battle with Tesco and the other traditional UK grocery chains.
There previously have been hints that Tesco Now was coming: Earlier this year, Tesco trialled one-hour deliveries in Zones one and two in London.
In a statement, Tesco’s online managing director Adrian Letts said: “From forgotten essentials to that crucial final ingredient, Tesco Now can get them to our customers’ door within the hour.
“Shoppers’ needs are changing and we want to offer a range of services that allow them to shop with us in a way that suits their needs. We look forward to hearing what they think of the new service.”
Meanwhile, Quiqup’s head of product Tim Linssen said: “As consumer expectations change, retailers of all sizes and across verticals will be expected to offer flexible, efficient and affordable delivery to their customers … We are proud to be partnering with Tesco to provide last-mile logistics and delivery services for Tesco Now. Time is precious for today’s consumer, and Tesco Now will help give Londoners more time for what they enjoy most.”
In May 2017, Quiqup announced it raised £20 million in venture capital funding. At the time, CEO Bassel El Koussa told Business Insider the cash injection will go towards growing the startup’s technical team, and towards expanding throughout the country beyond London.
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