Amazon has thrown down the gauntlet among UK retailers as the pureplay [a company that sells only one type of product or service] has re-asserted its dominance in the online channel. Having announced its lowest sales growth ever in 2022 (up 5.2% on 2021), Amazon can now boast another year of impressive growth. UK sales in GBP rose 10.7% in 2023 to reach £27.0bn. These results are more impressive when placed against a backdrop of poor online pureplay performances. The UK online pureplay market is expected to have risen by just 2.3% last year, with ASOS, boohoo and AO among others struggling in a highly competitive market, ensuring Amazon will extend its lead in the channel in 2023.

With many focused on the meteoric rise of Shein and Temu in 2023, Amazon has shrugged off these newcomers to the UK retail market, highlighting a stellar proposition that can weather changing consumer habits with ease.  Indeed, many retailers have been focused on making online operations more profitable, increasing delivery costs to their customers, raising free delivery thresholds and often charging for returns. The effect has been to make Amazon more competitive, even taking into account the increase in Prime membership fees in September 2022.

The cost-of-living crisis is far from over, and while inflation levels will ease throughout 2024, overall we will not see prices fall, meaning many will still feel the pinch. Yet Amazon is in a strong position to retain appeal among shoppers, with its plethora of discounting events and focus on price. And while the likes of Shein and Temu are yet to pose any significant threat to its proposition, it must continue to develop and enhance the online shopping experience for its customers with a focus on trust, given that these newcomers still have some way to go to impress shoppers on the quality of the goods they sell.

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By GlobalData