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What the New Premier League Deal Means for Amazon’s Grocery Ambitions

Our Guy Elliott, Retail Lead for EMEA and APAC, shares three reasons via The Grocer.

 

Last week, Amazon struck a three-year deal with the Premier League for exclusive coverage of 20 matches a season online, as part of users’ Prime package. Ten of these will be shown over one bank holiday – a key viewing time for football fans – while the other 10 will be midweek fixtures.

While this is huge news for the media industry, in particular Sky and BT Sport, the deal is likely to also have an impact on the grocery sector due to Amazon Prime’s Fresh add-on for just £3.99 per month.

’Amazon-only shoppers’ are already a segment in the US, where 15% of Prime members shop exclusively with Amazon for everything. In the UK that figure is reported at 6%. That makes the Premier League deal important for UK grocery for three reasons.

First, increased perception of value. With Amazon Prime already including the Amazon Prime Video package and next-day delivery on goods, the introduction of the Premier League match package will continue to reduce the perceived pain of spending £79 per year for consumers. Many football fans will see this as a way of getting more for their money. Online delivery is highly elastic, so if Amazon can further address price perceptions it will again grow Prime membership.

Second, building Amazon’s ecosystem. Amazon is continually working on its offering of interesting products it can offer as a kind of ‘gateway’ into Prime, to then hook customers into also shopping with the company. By offering access to football, it could potentially acquire a new segment of people who sign up to Prime as a consequence of this deal. Those people then have no reason not to shop with Amazon over other e-commerce companies who may charge for delivery.

For grocery, it acts in this same way; it massively decreases the barrier to trying Fresh. Customers already interested in grocery delivery are accustomed to paying for delivery slots with Amazon and traditional supermarket brands, and after signing up for the Prime subscription to watch the football, a monthly £3.99 fee is not a huge leap further to get groceries delivered to your home at any time.

Third, time spent with the brand. Amazon is always working to increase the amount of time consumers spend with it. Going through the website to access your football on Prime Video, for instance, gives the brand more time with the consumer. This increases brand recognition and affinity, and ups the individual’s likelihood to purchase more and more with the company over time. Ultimately, this builds towards its goal of being the ‘everything store’, including grocery.

With the double benefit of increasing the value of Prime for current subscribers who may now be less likely to leave, and the boost from new members keen to catch their favourite sport, Amazon may well find that Fresh sees a rise in subscribers, who will see the additional subscription cost as less painful – and possibly a good price alternative to traditional supermarkets.

Source

The Grocer

Publish Date

June 12, 2018

Author

Guy Elliott