Apex Insight comment on Amazon free delivery to UK click and collect locations

By Frank Proud

In the last couple of weeks, Amazon has made two interesting announcements regarding delivery: firstly that it would stop delivering to Collect Plus locations and secondly that it would offer free delivery to its own network of click and collect sites

The two announcements are clearly connected, with the first clearing the way for the second, and they represent further examples of a trend we have cited in our research on the sector over the last year: Amazon becoming more active in deliveries.

The main threat from the ‘Amazon free delivery’ announcement appears to be to other retailers competing with Amazon to sell books, or anything else, as Amazon has effectively cut its prices a bit more by making delivery free on anything over £20 from its marketplace (£10 from its own store). In part it can be seen as a response to the increasing number of free delivery offers on Ebay, often via Ebay’s partnership with Argos for click and collect.

While it doesn’t really affect parcels companies directly, the growth of ‘free’ tends to commoditise delivery and reduce the appetite of consumers to pay a premium for a quality delivery service. And more volume via click and collect probably means less via home delivery.

Our research (European Parcel Shop and Locker Networks Market Insight Report 2015) has found that lockers haven’t taken off in the UK in the way they have, say, in Germany. However, Amazon is one company that could really change that by driving adoiption of free-to-use models. This announcement confirms that Amazon has made a bit of progress in rolling out its lockers, now reporting that it has 300 locations, and they also have deals with Doddle and Smiths News, but the vast majority of the sites it has are post offices. We’re not sure that picking up a parcel from a post office is a particularly attractive option, given the concerns people tend to have about queues and opening times.

The announcement is most interesting for people who operate parcel shop and secure locker locations, like InPost and Collect Plus. It could be a threat, by promoting a direct alternative (and Collect Plus has clearly lost some Amazon business following the first announcement). Or perhaps it could be good for them in the longer term, by giving further impetus to click and collect and making other internet retailers subsidise ‘free’ delivery to their sites to compete with Amazon.