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Morrisons agrees grocery supply deal with Amazon

By Laurence Gibbons+

29-Feb-2016
Last updated on 01-Apr-2016 at 18:56 GMT2016-04-01T18:56:30Z

Morrisons has agreed a grocery supply deal with Amazon
Morrisons has agreed a grocery supply deal with Amazon

Morrisons and Amazon have agreed a new supply agreement, making the retailer’s products available for home delivery through the Amazon Prime Now service.

Amazon’s customers will be able to order Morrisons’ ambient, fresh and frozen grocery products through the Amazon Prime Now and Amazon Pantry services.

The deal would help Morrisons grow volumes and leverage its manufacturing, distribution and wholesale capabilities, the retailer claimed.

The combination of Morrisons “unique strengths as a food maker” and fresh food expertise with Amazon’s online and logistics capabilities was compelling, Morrisons ceo David Potts claimed.

‘A broader business’

“This is a low risk and capital light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business,” he said.

“We look forward to working with Amazon to develop and grow this partnership over the coming months.” 

Wholesale supply would also enable Morrisons to build a broader business that complemented its supermarkets and helped it pursue capital light growth, Potts added.

This is one of the retailer’s key six priorities outlined last summer as part of its turnaround plan.

City analyst Shore Capital said it was surprised by the announcement that could take Morrisons into Northern Ireland through the Amazon Pantry service.

Agreement in principle with Ocado

Morrisons has also reached an “agreement in principle” with Ocado to grow its Morrisons.com.

Morrisons' six-point plan
  • Competitiveness
  • Customer services
  • Localisation
  • Enhanced services
  • Simplification
  • Strengthen core supermarket estate

This would involve Morrisons taking space in Ocado’s new customer fulfilment centre in Erith, Cambridgeshire.  As part of the deal, Ocado will deliver a store pick solution for Morrisons that leverages Ocado’s technology and Morrisons store assets.

When implemented, this would help Morrisons.com, working with Ocado, to sell to customers all over Great Britain.

This amended agreement is subject to detailed terms being agreed and will only proceed if it enables Morrisons to achieve profitable growth online, Morrisons said.

There can be no certainty that an agreement will be concluded, Morrisons added.

Ocado boss Tim Steiner said: “This is a win-win arrangement which allows both of us to grow faster, and more profitably, in a grocery market where channel shift is now an unquestionable reality.”

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