Tesco Will Go Head To Head Against Amazon - Business Insider

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Amazon's Jeff Bezos

Tesco has hired one of Facebook?s most senior European executives and is launching a slew of online entertainment stores as it gears up for battle with Amazon.

The supermarket giant is preparing to launch two specialist ebook and music retail websites later this year, alongside the Blinkbox online movie store which it already owns.

Gavin Sathianathan, Facebook?s head of retail for Europe, the Middle East and Africa, will lead the books operation, Blinkboxbooks. Mark Bennett, a former EMI and Warner Music executive who now heads Sainsbury?s digital entertainment unit, will head up Blinkboxmusic.

Tesco bought an 80pc stake in the Blinkbox film and TV site in 2011, in what was widely interpreted as a defensive move against the likes of Amazon and Apple, whose own movie services were rapidly eating into Tesco?s share of the entertainment market.

Blinkbox customers can buy or rent new movies by downloading them over the internet, in a similar way to movie rental services like Netflix or Amazon?s Lovefilm. However, Blinkbox?s sales model allows it to offer recent box office hits, such as Skyfall, much earlier than those rivals, and even ahead of pay-TV operations like BSkyB.

Tesco has done little with the East London-based technology firm in the nearly two years it has owned it, but is now poised to spring into action.

The three Blinkbox retail sites will sit separately from Tescos? main online store and will only carry subtle Tesco branding. However, the supermarket will advertise the sites heavily in store and use them to ensure that customers in search of specialist online sites for books, music, films and TV box sets continue buying from the Tesco empire instead of falling into the habit of shopping for entertainment products elsewhere. It will target the millions of customers who still haven?t started shopping online in a big way.

In doing so, Tesco hopes to stop the steady march of customers going to Amazon for just one sort of item only to turn to the mammoth online retailer for a large range of household goods. That drift has already become ingrained in shopping habits in the US, where many customers regularly buy ordinary items such as nappies or cleaning products from Amazon, as well as luxury items like books and electrical goods.

Although Amazon far outranks Tesco in online sales, the supermarket?s chief executive Phil Carke has said he wants Tesco to become the world?s biggest ?multi-channel retailer? - the name given to stores that combine online retail websites with bricks-and-mortar shops.

Michael Comish, chef executive and founder of Blinkbox, said: ?Tesco is already the third largest retailer in the world, and we will have launched three new digital entertainment businesses by the end of the year, headed by some of Britain?s brightest digital minds. This is the beginning of a big journey.?

He added: ?I don?t think you compete head on against Amazon. I think you compete around Amazon and leverage the strengths you have... Amazon doesn?t have 2,000 stores. Amazon doesn?t deliver to within the hour. There?s a lot which Tesco has which customers value.?

News of Tesco?s online expansion plans come as the supermarket prepares to launch a Clubcard TV channel, underpinned by Blinkbox?s technology. The new television station will be available to members of Tesco?s ClubCard loyalty scheme, free of charge, and will offer a mix of archive films and television shows.

Initially it will only be available over the internet, but Tesco is in discussions with satellite and cable broadcasters about turning it into a mainstream television channel. The supermarket will use detailed information about viewers, collected through its ClubCard scheme, to serve up carefully tailored adverts to users on an almost household by household basis.

?They?ll be the most targeted TV adverts in the world,? said Mr Comish.

Source: http://www.businessinsider.com/tesco-will-go-head-to-head-against-amazon-2013-3

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