Tesco Logo

Part 1: Battle of The Giants – Tesco V’s Amazon – Who Will Win?


I’ve decided to release this earlier than what I had originally planned, its verging on the longest article I have done since University and while reading back through the first few sections its already totalling in excess of 10,000 words. So I’m releasing this beast in more manageable parts, for both me and you.

Over the next few days and weeks, I will be exploring the possibility of Tesco launching a ‘Tesco Direct Marketplace‘, to potentially rival that of Amazon (and eBay and anywhere else for that matter). I’ll be looking at the options that Tesco have available to them and what plus points they can take from their rivals and also which pitfalls to be careful of.

Its not going to be light on concepts, as with the possibility of a new platform. I am seeing this as a chance to re-write the whole idea of a Marketplace and evolve it further than what has been done before. It comes the potential to make a success we have not really seen from a retail giant, but it also has the potential to become a mess and land the company in an awkward position publicly and possibly financially.


2010 was a really interesting year as a by-stander, eBay has made more steps towards taking on Amazon directly (single styled listings etc), Amazon had a stab at eBay suggesting to sell granny’s unwanted lamp she had a Christmas present on Amazon (rather than eBay, amongst other smaller things), Amazon had a stab at Tesco by launching food products and Tesco responded almost immediately with a direct stab back at Amazon with a PR release that they were to be taking on Amazon with a new marketplace.

While all this has been going on Play.com have been relatively quiet and literally cleaning up, a recent satisfaction poll have them ranked right behind the two Amazon’s in third place beating the likes of John Lewis, Apple, M&S and so on…

However Play.com isn’t going to be the focus of this article, what I am going to be doing is exploring the idea of what could be done and how I would suggest its tackled, if Tesco was seriously considering launching a new marketplace to rival Amazon.

I’ll warn you now, I am expecting this article to be in the realms of thousands of words, I have even been thinking I could use this as a base for a dissertation, its bound to end up in that scale of coverage, although having never completed one and never having received any outline on how to format one, I feel I may be mocked for even suggesting this.

Note: If you have any comments I am always humbled to receive feedback, see the reply box at the bottom of the page.

Lets take a look contenders

Before we can progress we need to take a closer look at the two contenders in this fight. These are two heavy weight fighters of stellar proportions, whom both have obscenely deep pockets to dig into and a grit to make even the great Mohammed Ali run scared.


Amazon UKAmazon is synonymous with quality, speed and trust. You slap anything on Amazon and the buyers feel extremely reassured by that Amazon logo alone. Half the time I am sure that buyers do not really know whom they are buying from, as they assumed that the vast majority of the time its directly from Amazon themselves.

With Amazon launching their fulfilment offering ‘Fulfilment By Amazon’, also known as FBA, their Amazon prime customers really do not see any difference in cost of shipping, nor really any great degree in despatch times, as its all being despatched from their own warehouses.

Lets not forget that Amazon’s original business plan in 1994 scared the daylights out of investors at the beginning of the dot-com boom, they were literally the only one that had a decade long plan, where-as everyone else was measuring in months, Amazon took the view that it takes years to bring an business idea such as theirs to fruition, just look at them now, its only just begun.

Starting in 1994 and launched on-line in 1995, Amazon for me is one of the first choices of marketplace I go to, in fact I rarely go elsewhere for my book buying addiction and since receiving an iPad  as a bonus pressy (see article here), the one click buying of books for the Amazon Kindle reader App,  has my bank account running scared.

Books and other media are a symbiont of the Amazon brand, literally if I think of a book, I think Amazon and I am not alone in this with Amazon, I believe the general Internet population are of the same line-of-thought, its almost second nature, a preprogrammed thought pattern, Book = Amazon.

I remember preparing some presentation notes on Amazon and the differences between Amazon and eBay, it was really quite a trip back, while remembering that Amazon started off with a similar start as eBay, sporting an auctions offering for merchants, but it never really caught on as eBay even then was creaming it. So Amazon launched a new fixed price marketplace called zShops, its the spin off from this, which we know today as ‘Seller Central’.

zShops was faded out, basically I believe because it was crap (interface and no way of easily creating new product), but it did work and was bundled up into what we know as Seller Central and is actually a very simple and broad system to use.

I could go off into a bender on the Amazon Seller Central platform here, but for now you need to be aware that its similar to eBay as in you are able to create new inventory records and sell on Amazon.

Amazon is an interestingly flip to Tesco, as you’ll read shortly, Tesco have a lot of the off-line bases covered, inversely Amazon have a lot of the web bases covered, a quick brain-dump on thier channels:

  1. Amazon main and international sites
  2. Amazon Prime (listed separately as its genius)
  3. Own branded product range, named Pinzon
  4. Javari
  5. Endless.com
  6. Amazon Web Stores (AWS)
  7. A9 (believe this to be Research & Development)
  8. Fulfilment by Amazon
  9. An affiliate program of epic scale
  10. The Amazon Kindle
  11. ‘Amazon payments’ a payment processor (due to the UK in May?)
  12. And a whole host of ‘cloud’ based offerings & web services

And for sales, we’re talking billions, the figure I could find from wikipedia was $24.5bn in 2009, I could not find any quoted figures for 2010, a rough stab would be at the £30nb or more.

A side note, the Amazon logo

Amazon UK

Hey Look Amazon, A to Z!

Now I’d love to say I realised this, but it was a in a discussion with a client, notice the arrow below the A and Z, We do everything from A to Z? Makes sense now, I never spotted that.


Tesco isn’t to be shunned at all in this fight, these are remember, the retail giant of the UK and by a massive margin too. Using the figures from wikipedia, they had a market share of 30.5% in Dec 2009, ni-on double that of ASDA with 16.9%, Sainsburys 16.3% and Morrisons at 12.3%.


In 2006 Tesco launched ‘Tesco Direct, their public strategy is quoted as:

In 2006 we launched Tesco Direct , a new online and catalogue non-food offer, with over 12,500 products available online. Next day delivery is standard for small items with a unique two-hour delivery window. We issued 11.5 million catalogues last year. The popularity of our in-store Direct desks, which are now in 231 stores, continues to increase as more customers order and collect items from their local Tesco. We plan to add clothing to our online offer later this year. To find out more visit www.tesco.com/direct

I found an interesting statement on the Tesco Plc site for the year ending 28th Feb 2009, indicating that while they made an opening loss of around £22M, they were 2% up in direct comparison to UK trading profit.

The article is here and I have included the extract below

Increased productivity and good expense control enabled us to maintain solid margins and deliver good profit growth despite these challenges, whilst also absorbing initial trading losses totalling around £22m on Tesco Direct. After these costs, UK trading profit rose 12.7% to £2,381m (last year £2,112m), with trading margins at 6.2%, including TPF, slightly up on last year. On a 52-week comparable basis, UK trading profit rose 10.7%.

If you look further around thier Plc site, then some truly stunning numbers are publicly shown, I dribbled when I read these numbers, they have a Non-food sales figure of £13.1 billion, yes billion for 2009/2010. After the Christmas we just had, this has to be closer to the £15bn mark.


I could not find any published figures on the sales volume for the Tesco Direct site, an guess that the site takes about 2bn, with the majority of sales being made from their main site or the other two sub sites for clothing and entertainment.

Tesco Outlet on eBay

In 2008 in partnership with Trojan Electronics, Tesco launched on eBay as Tesco Outlet, I know this as I was the person that trained the staff and the two companies on the software they are using to launch to eBay with. As Trojan Electronics is a refurbishment house, it made great sense for Tesco to leverage the refurbishment channel and sell the goods direct (well indirectly, but its far superior and more lucrative for them this way).

In October 2010, on eBay alone, Tesco Outlet according to Terapeak, scored in the region of £370K of sales on eBay, £531K in November and £488K in December, although the sales for the first few days of the year are pitiful in comparison, I can only assume that someone forgot to launch a sale.

With the £13.1bn worth of non-food sales, then you have to expect some broken kit, most of which ends up in refurbishment houses such as Trojan, however not all ends there are can traditionally retailers such as Tesco get done-over on the pricing of kit, this was actually a shrewd move by them that year, although I am pretty sure that this was started by the asset recovery sections on the Tesco Giant, rather than being initiated at Board level; Maybe its what has given them the taste to take on Amazon?

Tesco Sales Channels

Tesco know they need to go multi-channel and have been busy, what a set of channels they have, a quick brain-dump on these are:

  1. Retail Super Stores (food)
  2. Tesco Metro/Express
  3. Tesco Extra & Homeplus
  4. Catalogues
  5. Telecommunications (Tesco Mobile)
  6. Tesco Finance
  7. Tesco Direct Site
  8. Tesco Clothing Site
  9. Tesco Entertainment
  10. Tesco Outlet on eBay
  11. Club cards (noted as a separate channel on purpose, you’ll see why later)

Note the lack of Amazon here, they could have easily ported their goods on to the platform, but never did. I wonder why? But ‘Holy Cow’, these peeps have more channels and fingers in pies that one can shake stock at. Amazon needs to be scared, if its off-line, Tesco have the ALL bases cover and soon maybe, online covered more thoroughly too.

The Contenders Summary

Some 1600 words in and I’ve not even got to the juicy parts yet, but without this understanding of the two marketplaces above, we cannot compare the two together. I will not just be comparing these two either, I will be pulling in the good and bad points from other market places too to give a fuller picture.

eBay has never to my knowledge declared war on Amazon and inversely I have seen Amazon wave two fingers at eBay. I always expected for a third party such as Microsoft or Google to get in on the fight, perhaps Amazon see Tesco as easy prey, maybe now Tesco see Amazon as easy prey.

These two companies are giants in their own arena’s, it was not going to be long until the two bumped into each other and this really has the makings of something on an epic scale.

What ever happens this is going to be a battle of epic proportions and I really do not know who is going to win in the end, if either of them. But thats not the point of this article, what I am now going to explore is how Tesco can make a Marketplace to rival Amazon. Its not going to be easy.

Your Feedback

So, I’ve primed the background to these giants, one an off-line expert, one an on-line expert, who is your money on and why?

24 replies
  1. Guest
    Guest says:

    I see ALL the supermarkets eating into Amazon’s market share.  Home delivery of goods from Amazon has become a nightmare.  Many changes will occur at the post office making things even worse.  Carriers are making losses and it can’t go on.  Delivery prices from Amazon will have to go up.  Watch Asda go next year.

    • Matthew Ogborne
      Matthew Ogborne says:

      I’m not sure the delivery prices will go up, especially Amazon Prime subscriptions, at £49 its going to be hard for them to move above this figure. May be base figures for standard transactions, but Prime will most likely stay the same.

  2. Gareth Davies
    Gareth Davies says:

    Who will win? Hopefully consumers in terms of lower pricing. Whereas Tesco has been percieved to have stamped all over the local corner shop because small retailers cannot compete in terms of price they obviously still survive in a niche because of convenience.

    Nor have they been able to completely control the supermarket market (had to leave that awful wording in) as although doubling the market share of ASDA is a massive advantage it doesnt mean that ASDA, Morrisons et al are “losing” – they just arent as big.

    Webwise there doesnt have to be a winner either, neither Tesco or Amazon are likely to be felled by the other,  Amazon at the moment are the trusted market leader in peoples eyes (at least thats my perception) and even aggressive marketing by Tesco isnt going to change that as long as Amazon keep their eye on the ball – and as you said theyve been doing that since the outset.

    To use a boxing analogy these are two heavyweights throwing the odd jab at each other, both know they cant land a winning blow and so they shuffle back and forth in the ring pretending to tussle (over price and convenience) while making sure that any contenders further down the ladder dont get a look in.

    Competition between guys like this can only work for the consumer (as long as we dont get into pricefixing territory)

    Or am I hopelessly naive when it comes to big business

    • Matthew Ogborne
      Matthew Ogborne says:

      Hi Gareth,

      I very much doubt you’re “hopelessly naive when it comes to big business; “The “customer” is definitely in to benefit from these movements and you’re absolutely right when you mention that there does not have to be a out-right winner, just enough to make it impossible for others to encroach on “their” share.


  3. Matthew Ogborne
    Matthew Ogborne says:

    I’m not so sure. Yes Amazon do have so superb USP’s and a thirst, that is not even comparable to others.

    However… as you suggest, Tesco is the ONLY company that could viable try and compete.
    Very exciting times and I’m looking forward to watching this as a bystander to see what happens and how the game is played.


  4. James
    James says:

    Oh, and my money is on Amazon. Why? FBA, and global reach. Tesco will have the same brand adjacency issues recruiting sellers. Definitely the only company that could try and compete with Amazon though…

    • Matthew Ogborne
      Matthew Ogborne says:

      I’m not so sure. Yes Amazon do have so superb USP’s and a thirst, that is not even comparable to others. 

      However… as you suggest, Tesco is the ONLY company that could viable try and compete.
      Very exciting times and I’m looking forward to watching this as a bystander to see what happens and how the game is played.


      • guest
        guest says:

        What do you think are Amazon’s USP’s…I don’t see any (they need to be UNIQUE).  After failing to deliver so many products to customers last christmas I think people are moving away.  Developing some real weaknesses as with many other solely on line retailers.

    • Matthew Ogborne
      Matthew Ogborne says:

      Howdy James,

      Many thanks for the feedback.Oh totally agreed, launching their own[Tesco] marketplace, leveraging the collection points and distribution network they already have in-place, is literally ‘unrivalled’ and I very much doubt purely “in spite” of the move Amazon made into Grocery.

      I never did finish this article, it got to about 25K words and decided to break it up in to manageable chunks. This was the first of what was going to be many. The latter sections, I have not released. There are two reasons for this, the first is the time needed to complete them satisfactorily; The second, the rule book could be rewritten and decided that was far more valuable to be ‘sat on’ than releasing into the public domain or others to use.I believe it launches soon, in Home/Garden. I’m looking forward on the dynamics they employ.

      Ultimately without merchants, its pretty much useless, so I’m sure we’ll soon see the path they have chosen for their acquisition.


  5. Steve
    Steve says:

    Another point about the Logo is it’s a smile, to give you a warm fuzzy feeling about them or at least that’s how I’ve looked at it. Think what it would be like if it was on top, a frown.

  6. Guest2
    Guest2 says:

    @Guest forgot Sears, 1000 markets which is now part of Bonanza. I would look at who Tesco is hiring to see if they are already planning on doing this. Amazon gave away that they were entering the wine business at one point by listing wine buyer jobs. The Sears marketplace experience looks more like an experiment then a well thought out plan.

  7. Guest
    Guest says:

    taking on Amazon isn’t necessarily a new model, Tesco may just be poised to do it better. myDeco has already launched something similar with allowing third party merchants to sell on their websites in a dropshipper fashion providing those merchants with their own “Seller central” portal login using a software that can convert data without any trouble to match the API’s of sites like Amazon, ebay, walmart, etc.

  8. Neil Benson
    Neil Benson says:

    Hi Matthew, shaping up to be an interesting article.

    A couple of questions:

    What are Amazon’s sales figures? You’ve stated 2009 at $24.5B in 2009 and estimated £30B for 2010. I think the 2010 currency in GBP is a typo. (Unless they really grew sales by over 50% in 2010 and you’ve converted USD into GBP!)

    What’s a channel?. You’ve just listed a bunch of different stuff and slapped a ‘channel’ label on it. For example, stores and websites are two different sales and distribution channels — they are different ways that a consumer can buy and receive a TV from Tesco. But I can’t buy a TV from Tesco Finance, that’s not a channel for Tesco, it’s a completely different business unit. And you haven’t even come close to listing all of Tesco’s business units (energy, internet connectivity, garden stores, diet clubs, etc.).

    Really? You didn’t see the A to Z in the Amazon logo? Do you see the smile in a smiley? ;)

    • Matthew Ogborne
      Matthew Ogborne says:

      Hi Neil,

      Firstly, thank you, this is the type of input I desperately need to shape the path of the subsequent articles.

      To answer your queries:

      What are Amazon’s sales figures? You’ve stated 2009 at $24.5B in 2009 and estimated £30B for 2010. I think the 2010 currency in GBP is a typo. (Unless they really grew sales by over 50% in 2010 and you’ve converted USD into GBP!)

      I will try and find the correct values and I do suspect that you’re absolutely right and I’ve got the $ and £ signs mixed up, if this is the only issue you have found with my typing in the previous thousand or so words, I’m really chuffed as my typing & use of grammar, frankly, sucks.

      What’s a channel?. You’ve just listed a bunch of different stuff and slapped a ‘channel’ label on it. For example, stores and websites are two different sales and distribution channels — they are different ways that a consumer can buy and receive a TV from Tesco. But I can’t buy a TV from Tesco Finance, that’s not a channel for Tesco, it’s a completely different business unit. And you haven’t even come close to listing all of Tesco’s business units (energy, internet connectivity, garden stores, diet clubs, etc.).

      Yes, perhaps I have looked at this too simply and slapped the ‘channel’ label on business units. What I intended to try and list was avenues in which Tesco have at their disposal to leverage sales of one type or another. And yes, I probably have missed loads, it was a quick ‘brain dump’, so was not expecting it to be all-encompassing and as you’ve rightly pointed out, missing loads.

      Really? You didn’t see the A to Z in the Amazon logo? Do you see the smile in a smiley?

      Nope, I saw the potential smile, but never made the association between the A and the Z, it really was one of those ‘ooo-aaah’ moments :)


  9. John O'Neill
    John O'Neill says:

    Hi Matthew – Very interesting article. I approached both Asda and Morrisions 2 years ago with exactly this proposal, and online auctions/classified site to compliment their existing online presence called Asda MarketPlace and Morrisions MarketPlace respectively, and got nowhere. I tried to contact Tesco, but couldn’t make any headway in even getting a contact name. I’m pretty sure I did email or contact someone, and I’m currently trawling through my emails to find out if I did or not. Asda and Morrisons, definately, Tesco, I’m not so sure. Typical… Oh well, back to the drawing board.

    • Matthew Ogborne
      Matthew Ogborne says:

      Hi John,

      That’s quite interesting, as only with the recent ‘push’ by eBay to bring in larger companies, has this entire concept has been seriously considered by them. Its working, as there is a definite increase in the number of companies actually considering eBay as a marketplace offering.

      See the outlet section on eBay here http://deals.ebay.co.uk/outlet/, although some are setup horrendously poorly, even with four highly experienced companies, ToysRUs, GSI, eBay and Channel Advisor, they are making a hash job, as per a recent set of articles which got me an an interesting response (told to calm it down, calling it an alternative word of ‘poop’, was probably a little OTT) as certain parties were upset because I pointed this out. See here http://lastdropofink.co.uk/tag/toysrus/ for the articles, I have a fourth that is in draft, that revisits the subject, now that more time has passed.

      This is to be accelerated with eBay’s program called FSP (Full Service Provider), which they[eBay] offer to such companies, but leverage the skills of existing business on eBay (There are 3 of these in the UK, Luzern, Trojan & My1stWish to my knowledge, in Germany there are approximately 20 which is where the idea came from).

      Back to my point, two years ago, ASDA, Morrisons, Tesco and such like were not ready for this, while gaining pace, it had not hit the MD/Board level, as more companies are added, then it will hit board room discussions and I am sure we shall see more parties join the game, either leveraging an existing platform such as eBay or by creating their own marketplace.

      Thanks for your comments, it has given a different perspective; It was not until a comment from a peer this morning, that the consideration of what happens if I do not follow the line of thought I have sketched out in the soon to be released second part of this article, that what happens if Tesco do not evolve their Tesco Direct site and instead, buy-into the arena by buying another company, perhaps OverStock.com or Play.com, both pose interesting avenues, that I had not even contemplated.


  10. Louise Base
    Louise Base says:

    Yea I did not know the A to Z logo either, been staring at it for long enough too.

    Can’t wait for the next part Matthew

  11. Simon Foster
    Simon Foster says:

    3 quick reasons why my money would be on Tesco.

    1.Being A trusted brand offline , will gain access to a mass market that solely online retailers/marketplaces just won’t be able to tap into.
    2.Infrastucture of stores and delivery vans. Potential to offer delivery or local collection services ?
    3.Historically , Tesco doesn’t enter the ring unless it is ready.

    It is a heavyweight contest i’m looking forward to seeing. Bring it on.
    Look forward to reading the next instalments Matthew.

    I never knew about the A-Z logo bit either.

    • Matthew Ogborne
      Matthew Ogborne says:

      Hi Simon,

      Its one giant of the off-line world and one for the on-line world, one of my greatest concerns is on how well the Tesco ‘brand’ actually converts to on-line sales. When I look at the Amazon logo, I fee reassure, I am not sure that the Tesco logo has (currently) the same attributes.

      Stop stealing my thunder :P
      The distribution side to this is mega, Amazon have to rely on third parties, for which I believe its the third time Royal Mail have lost the direct contact there now? I might be wrong though. Same day deliveries, its perfectly possible.

      I need to do some further research on Tesco, it will be interesting adding what I find (as you’re suggesting a rather shrewd approach in their history).

      Thanks you comments, keep them coming!


  12. Sarah Magener
    Sarah Magener says:


    I too have been waiting for a ‘war’ to unfold amongst the Internet giants, for Google to step over the line with another company i.e. Microsoft or for eBay and Amazon to go head to head.

    I didn’t even conceive that it could be potentially started from a retail stance, looking forward to the next section, I can already think of numerous ways both Amazon and eBay could be improved.



Trackbacks & Pingbacks

  1. […] Update: This article has been expanded upon further, see Part 1: Battle of The Giants – Tesco V’s Amazon – Who Will Win? […]

  2. Battle of The Giants – Tesco V’s Amazon – Who Will Win? http://t.co/aXVxnBbF

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