Tesco in third digital buy as it takes aim at Amazon

Philip Clarke, the chief executive of Tesco, has made his third significant digital acquisition in just over a year as Britain's biggest supermarket chain appears to be squaring up for a full-scale confrontation with US online giant Amazon.

Mr Clarke's latest purchase is the e-books platform Mobcast, co-founded by author and former SAS soldier Andy McNab, which creates software for publishers and other clients to deliver digital content.

Tesco bought internet radio service WE7 in June and digital-movie streaming service Blinkbox, a rival to Amazon's LoveFilm, last year. It is paying only £4.5m for Mobcast but analysts said it was highly significant because it is part of a wider trend.

Supermarkets have made huge profits by moving into books, DVDs and CDs in the last decade, and are anxious to maintain that revenue now that sales of physical goods are falling in favour of digital versions. Sainsbury's bought digital books venture aNobii in June, and Morrisons acquired online retailer Kiddicare last year.

Some industry insiders have been alarmed at the continued rise of Amazon, which dominates bookselling with an estimated 25 per cent-plus market share in the UK and is big in music and electronics. There is also talk the US giant could be considering a move into groceries.

Michael Comish, who co-founded Blinkbox but is now Tesco's chief executive for digital entertainment, acknowledged Amazon was a major competitor, telling The Independent: "I think almost every retailer in the world competes with Amazon."

Mr Comish said Tesco did not yet have a big presence in e-books but Mobcast would help to change that. "From a digital point of view, we're not massively involved in books," he said.

"But from a physical point of view, we're one of the largest book retailers in Britain. In the UK, about 10 per cent of the books market is digital; in the US it is about 20 per cent. So by next year, in Britain you'd think it would be 20-25 per cent."

Mr Comish added that entering the digital books, music and movie markets was about more than sales. "It's not just the revenues associated with these categories – these are high passion, high engagement categories. It's not just baked beans – you can build strong relationships off these categories."

Richard Perks, retail director at research firm Mintel, said he expected more digital acquisitions. "No one knows how retailing is going to develop," he said. "But it is essential that retailers are alive to the possibilities and gear themselves up to take advantage of the opportunities that arise."

He said the long-term winners were likely to be retailers that combined physical and digital stores, known as multi-channel, rather than online-only stores, known as digital pure-plays.

"Our data show that it is the multi-channel retailers who are seeing the strongest online growth, not the pure plays, even Amazon," said Mr Perks. "So any retailer must give the best possible service both on and off-line. That's where this Mobcast acquisition comes in."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there