The online grocery delivery service AmazonFresh has launched in Berlin and Potsdam, with plans to expand further in Germany. What does it mean for the famously competitive German retail market? Arthur Sullivan reports:"I used to love going shopping by myself when I was a bit younger," says Fabian, a 32-year-old media professional living in the Prenzlauer Berg district of Berlin. "But now I've got kids and both myself and my wife are working full time and we don't want to spend our Saturday in the shopping mall. It's more convenient to get it delivered." Fabian is exactly the kind of consumer Amazon will have had in mind when the world's largest internet-based retailer announced they were rolling out AmazonFresh – their online fresh food produce and grocery service – to the German market for the first time. Its initial scope within Europe's largest economy will be relatively limited. For starters, AmazonFresh will be available only in Berlin and the nearby city of Potsdam and exclusively to those, like Fabian, who are signed up to Amazon Prime, a membership program with access to various online retail perks and benefits. It costs 69 euros per year, or 8.99 euros per month. For €9.99 per month, Amazon Prime members will be able to order an unlimited number of grocery deliveries with AmazonFresh, as long as each delivery has a minimum value of 40 euros ($43.5). Watch: The future of eating "The key to the long-term success of AmazonFresh is the combination of great choice, good pricing, flexible delivery options, and the service customers appreciate at Amazon," says AmazonFresh Vice President Ajay Kavan. Those elements are consistently highlighted by AmazonFresh representatives as being central to the company's appeal, but will it be enough to succeed in Germany? Not online groceries please, we're German Germans are relatively big online shoppers by EU standards. However, grocery e-commerce – in particular perishable grocery delivery such as that provided by AmazonFresh – has yet to take off in Germany. According to figures provided to DW by the German Retail Federation (HDE), the online grocery market in Germany is worth about 1.7 billion euros annually, with just 1 percent of annual revenue in the German grocery sector generated through online purchases. Furthermore, the HDE estimates that two-thirds of Germans have never ordered groceries online while just 6 percent are regular online food shoppers. A commonly cited reason for Germany's less than warm embrace of grocery e-commerce is its high density of supermarkets. According to 2016 figures from data analysts Nielsen, Germany has the fourth-highest number of stores per capita in the EU, with smaller supermarkets especially common. In terms of the larger economies of Europe, Germany has easily the highest density of supermarkets, far more than the UK, France, Spain and Italy. As well as this, German consumers have a reputation for discernment, particularly online consumers, and return rates are high; therefore, it's probably not surprising that online shopping for something as vulnerable as perishable food has yet to grab the popular imagination. Until recently, there has been reluctance on the part of many German retail giants to invest too heavily in grocery e-commerce but the long-anticipated entrance of AmazonFresh into the market can be seen in the context of fast-changing business sentiment that now sees considerable potential for growth in the sector in Germany. REWE, one of the country's largest supermarket groups, have been investing heavily in the area for the past few years. With its increased emphasis on helping consumers order fresh produce via a slick mobile app and the fact that its online service is available in 75 cities throughout Germany, it will provide by far the biggest immediate challenge to AmazonFresh. Deutsche Post DHL's "Allyouneed" service will be another competitor, but the fact that theis company won the contract to deliver for AmazonFresh in Germany is an intriguing development in this regard. Since last year, Kaufland has made significant steps in the area, as has Edeka with its purchase of delivery service Bringmeister. However, other major players in the German grocery business such as Lidl, Aldi and the Metro Group have thus far made only limited steps into grocery e-commerce. Watch: Amazon's cashless stores REWE CEO Alain Caparros has made no secret of the fact that he sees the entrance of AmazonFresh as a major threat to German retailers. "AmazonFresh will come in like a tornado and as a result, some traders will find themselves in trouble," he told German newspaper "Welt am Sonntag" recently. Keeping the market fresh "The standards in grocery retailing are exceptionally high," Christine Maukel of AmazonFresh told DW. "We aren't commenting on the services of other companies and the market itself but are concentrating on our customers. And one of the questions we have heard from many of our customers is ‘When are you launching AmazonFresh here?'" AmazonFresh will offer around 85,000 products from a wide variety of Berlin stores, instantly putting them far ahead of their competitors in Germany in terms of product range. Their claims of flexible delivery seem to stand up too – all orders made before noon will be delivered on the same day while deliveries can be made in two-hour windows from 5 a.m. to 10 p.m. Yet, as choreographed as AmazonFresh's entrance into the German market has been – it has been building its food delivery service incrementally in Germany since 2010 – it has also been relatively tentative, pointing towards the considerable variables at play in the ultra-competitive German retail market and also, towards AmazonFresh's own experiences elsewhere. Despite launching in Seattle in the US almost a decade ago, AmazonFresh's geographical expansion has been much slower than was initially expected. Although the pace of expansion has quickened in the last two years with a steady spread across the United States, into the UK and now into Germany, it has not proven as disruptive to grocery retailers as was initially feared by some in the sector. AmazonFresh is playing it safe by launching only in Berlin and Potsdam, but it does plan on expanding to other parts of Germany, Ms Maukel confirmed to DW. There have been several reports that they are ready to launch in Munich, but for now, all eyes will be on how they perform in the Berlin area. The size of the German grocery retail market makes it an extremely attractive proposition for AmazonFresh, but it knows it's entering difficult territory against some of the largest and most experienced grocery retailers in the world. It remains to be seen if their entrance will slay any dragons, or merely poke them into action.
