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GUEST COMMENT Should our supermarkets become Amazon-style online marketplaces?

Image: Shutterstock Walmart

According to eMarketer, Walmart is now the second-biggest e-commerce company in the US. It might still be a fair way behind Amazon, but it’s now ahead of eBay and Apple. That’s a pretty good showing for a chain grounded in bricks-and-mortar retail.

A look at Walmart Connect, its e-commerce arm, soon shows why its growth has been so remarkable: it’s not just selling products online, it’s doing what Amazon does. 

Walmart now offers a service based on keywords, data and algorithms. Brands aren’t just competing for shelf space anymore, they can buy places on with sponsored advertising, product carousels and buy boxes. Brands can place their products at the top of the search list – and challenger brands can buy placement on the market leaders’ product pages.

But perhaps more importantly, it signals a way forward for retailers on this side of the Atlantic. The Amazon model clearly works well for e-commerce – so has the time come for more retailers to try it? We might no longer have Walmart in the UK and Europe, but we certainly have supermarket and grocery chains with size and scale who could reap the benefits.

Who will be the next European Amazon?

Carrefour has locations throughout Europe and Asia. Sainsbury’s owns Argos and Habitat, giving it a wide range of non-food products. Tesco has a well-known history of putting its own brand on everything from pet insurance to telecoms.

There are several supermarket chains that could not only take Walmart’s strategy, but should probably be viewing it as their natural next step as online shopping increasingly becomes the norm. Amazon is already ahead of Google as the ‘go-to’ choice for product-related searches.

The Big Four UK supermarkets – and the discounters like Aldi and Lidl – have well-established brand values and trust, so they don’t have to go through the early stages of winning consumer trust the way that Amazon had to do. In fact, there is an argument that in the EU, where Amazon is not quite as strong as in the UK, consumers’ trust in Carrefour for example, is greater.

Becoming a marketplace will provide more opportunities to more product brands, especially smaller brands who might not be able to afford physical shelf space. The chains could also invest in demand-side platform (DSP) interaction the way that Amazon and Walmart do – enabling brands to buy advertising space on their sites in real time and use retargeting on other sites to show customers products that might be of interest and draw them back.

Where supermarkets have a head start

In some cases, the big UK chains are ahead of the game. For all the disquiet that followed the launch of Amazon Fresh, it is still very much a smaller challenger brand in the ‘weekly food shop’ space. When it comes to grocery shopping in particular, Tesco, Sainsbury’s and the rest are still number one. 

Grocery chains also have a notable track record in high-quality own-brand merchandise, certainly for food, which they could leverage. And as for moving into other products, it’s not like any of us would be particularly surprised if Tesco suddenly announced a range of Tesco-brand, ‘white label’ fridges and freezers like it did with Technika TVs. 

Adapting to the changing sector

Although some of the UK supermarkets have been historically slow to react to the shift to e-commerce, they’ve had to move faster as Covid accelerated this transformation. They now have a broader and more effective home delivery infrastructure in place, compared to last April when slots couldn’t be had for love nor money.

Like Amazon, they have warehouse space and could offer both vendor and seller models to brands. The question is how a shift to a marketplace approach would affect their existing stock and infrastructure processes – not to mention the impact on their armies of buyers who are currently geared up primarily towards placing products on physical shelves.

But whilst their internal model may need to change, the revenue opportunity from this type of transformation is vast. It would provide the UK grocery chains with greater reach, new revenue streams and less cost. In fact, all the benefits that Amazon has used to take such an impressive market share.

The success of Walmart in the US highlights the value of the Amazon model and that customers want to shop that way. It’s not really a question of if UK supermarkets will change their e-commerce thinking to match the shifts in consumer behaviour, but when. And perhaps more importantly, who’s going to do it first? 

After all, Carrefour is a tech-savvy business that already offers innovations like voice shopping in partnership with Google. If Tesco, Asda and the UK chains don’t step up their digital commerce game and move in the direction of becoming an online marketplace, they might potentially face another channel disrupter arriving on their doorstep.


Peter Martin is managing director of digital commerce agency SMP

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