Five years ago, Iceland’s position on Amazon was unequivocal. As group MD Tarsem Dhaliwal put it: “We hate Amazon.”
At the time, Amazon was a couple of years into its partnership with Morrisons, the supermarket supplying the online giant with a range of fresh, ambient and frozen products.
“They’ll bully us and do horrible things to us,” Dhaliwal continued. “They’ll use us, we don’t want anything to do with them.”
Which makes Iceland’s arrival on Amazon.co.uk earlier this month somewhat unexpected. So what’s changed?
A change in how retailers view app-based platforms
In the intervening years, Morrisons’ relationship with Amazon has evolved. Initially serving solely as a supplier to Amazon – enabling Amazon to sell fresh produce via its site for the first time – in 2020, Morrisons’ products started appearing on the main Amazon.co.uk website.
This gave Morrisons a dedicated online store front – accessible from the main website’s search bar drop-down menu – and putting the supermarket in front of “millions” of Amazon shoppers.
And it worked. As Morrisons CEO David Potts explained in 2021, the move was “always going to be a kicker for sales revenue”, adding that “customers are really tucking into it”.
Co-op was convinced to strike a deal later that same year, giving Prime members the ability to do “their full Co-op grocery shop” on the Amazon site, and a stated ambition for the tie-up to “become a nationwide service”.
That Amazon appears not to have ‘done horrible things’ to either Morrisons or Co-op – and might even have helped boost sales – may well have eased Dhaliwal’s fears.
But there has also been a change in the way retailers view online and app-based platforms in recent years. Once considered data-thirsty, customer relationship-stealing threats, the likes of Deliveroo, Uber Eats and increasingly Amazon are now considered simply additional channels where demographics a supermarket might not otherwise reach like to shop.
Iceland will never have Amazon’s presence
The pandemic also helped switch the narrative – the courier apps especially allowed more customers to be reached than a supermarket’s own fleet ever could. But it has lasted. Deliveroo and Uber Eats continue to sign major supermarket deals.
Despite a strong online proposition – free next-day delivery for orders over £40 – Iceland will never have the presence of Amazon, which according to YouGov is the UK’s fourth most popular digital service – ahead of BBC iPlayer, Tesco Clubcard and YouTube.
As Iceland’s chief customer & digital officer David Devany explained, the tie-up was “an exciting opportunity for us to introduce new shoppers to the benefits of shopping with Iceland”.
Further, Amazon is less of the scary, traditional retail-destroying monster it was once seen as. Its own efforts in grocery have not yet made much of a mark on the wider market. It has suffered setbacks, rather than simply swallowing everything in its path. It is a more palatable partner now than before.
For Iceland, the unlikely partnership could be the start of a wonderful romance.
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