Morrisons and Amazon sign supply agreement

In the coming months, hundreds of Morrisons products will become available to Amazon Prime Now and Amazon Pantry customers on a wholesale basis here in the UK.

“The combination of our fresh food expertise with Amazon’s online and logistics capabilities is compelling”, said Morrisons chief executive David Potts.

Morrisons, which was relatively late to online delivery, has little to lose from the deal as it has just 3% of the market, but will worry market leader Tesco. “For Ocado, the Amazon contract enhances a pure-play challenge”.

Last week we reported that Amazon launched fresh produce delivery in Italy, through its service Prime Now.

The supermarket said it would take up space at Ocado’s new customer fulfilment centre in Erith, south east London, in a move to “sell to customers all over Great Britain”.

Morrisons also said it will continue to expand its own online business which is operated in conjunction with Ocado, with plans to increase it to across the UK.

‘Having made significant advances already, helped by Ocado (from nothing to an anecdotally solid and ever improving online service) the tie-up with Amazon has potential to narrow even further what is a significant gap with United Kingdom incumbent rivals’.

The new deal extends that offer to include fresh food. Ocado would also deliver a store pick solution for Morrisons that leverages Ocado’s technology and Morrisons store assets.

Morrisons” shares gained 8.5p to 196.6p, making them the top “mid cap’ riser on the FTSE 250 index.

The amended agreement will only go ahead if it enables Morrisons to achieve profitable growth online, the company said, stressing that there can be “no certainty” that it will go ahead.

He added: “It is highly complementary to the business in its current form”.