Is high street retailer Argos about to block the Amazon online juggernaut? This week it leapfrogged its giant US rival by promising same-day delivery to anywhere in the UK to those who buy online – a deal that beats Amazon’s much pricier “Prime” service.
Amazon has won millions of customers with a combination of low prices and efficient delivery. It left Argos looking out-of-date with often shabby stores, bulky catalogues and queues to collect goods. Now it is fighting back with refreshed stores and – for £3.95 – a promise to deliver goods to your home on the same day you order online.
Can it match Amazon prices? We price-tested a random selection of goods (see opposite) and found that on high-value items (such as Apple computers) Argos struggles to compete, but on lower-value items (such as toasters, irons and toys) it matches or beats Amazon.
Is it any better at paying its taxes? Many shoppers baulk at buying from Amazon as it has persistently avoided tax in the UK paying just £11.9m last year on £5.3bn of sales from British internet shoppers. As in previous years, the UK accounts make clear Amazon.co.uk Limited claims not to sell to British online shoppers: instead the group’s Luxembourg arm fulfils that role.
Argos is domiciled in the UK, and pays its taxes here, although, in reality, it does not add up to hugely more than Amazon. It is owned by Home Retail Group (which also operates Homebase) and recorded total sales of £5.7bn in its last financial year. Profit was £129.3m, on which it paid tax of £29.3m.
In a statement Home Retail Group said: “As a British domiciled company, we pay corporation tax on our profits and we also pay significant business rates tax, plus the usual employment taxes including national insurance.”
How does same-day delivery compare? It does not extend to all its products, covering around 20,000 lines labelled “Fast Track” on its website.
But the flat fee of £3.95 undercuts Amazon’s one-hour “Prime Now” at £6.99 per order and which is only available within certain London postcodes, and to customers who pay £79 a year for its “Prime” scheme.
Argos says it offers four home delivery slots each day, seven days a week, except for Christmas Day. Customers must order by 6pm to receive an item by 10pm. But can it really stand by this in relatively remote areas?
Chief executive John Walden says the company has taken on 3,300 new delivery agents, with another 1,000 to be recruited to cover the Christmas period.
“Argos led the way with ‘click and collect’ 15 years ago, and customers can continue to shop with us in the traditional ways if they choose,” Walden said. “But we believe ‘Fast Track’ is the next big innovation and brings shopping in to the digital age. No other retailer can offer the breadth of products immediately, or at that speed.”
Walden would not disclose how much Argos had invested in re-engineering its national “hub & spoke” distribution network which is central to improving the quality and speed of delivery, but said: “We can do this because we are a different type of retailer. We know where every product is in our network and for customers who shop across digital channels – online and mobile – that means they get what they want faster and with certainty.”
Will it fail in its promises? Last year retailers were hit by a series of glitches and disrupted deliveries in the run-up to Christmas. Sainsbury’s accidentally cancelled hundreds of online orders after a computer failure, and Waitrose online shoppers were let down after a website glitch. Marks & Spencer and delivery company Yodel – which delivers for retailers including Amazon, Argos, Boots and Tesco Direct – also experienced problems after being overwhelmed with orders during the “Black Friday” discount weekend.
