Morrisons signs deal to supply Amazon

UK supermarket Morrisons has signed a surprise deal to sell its products on Amazon, while amending its existing deal with Ocado to grow its own offering.

morrisonsThe new supply deal between the UK supermarket and the online giant, announced this morning, will see Morrisons turn wholesaler, with hundreds of its range, including ambient, fresh and frozen food, available on Amazon’s premium paid-for service, Amazon Prime Now and Amazon Pantry.

A spokesman from Morrisons said the range had yet to be finalised – but both Amazon Prime and Amazon Pantry already sell a selection of beers, wines and spirits on the site.

Chief executive David Potts said the combination of Morrisons’ fresh food expertise with Amazon’s online and logistics capabilities was “compelling”, with wholesale supply enabling the retailer to grow volume, and leverage its manufacturing, distribution and wholesale capabilities.

“This is a low risk and capital light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business. We look forward to working with Amazon to develop and grow this partnership over the coming months,” he said

Morrisons also announced a tentative deal with Ocado, with whom it has a 23-year agreement for its online delivery – to take space in Ocado’s new Customer Fulfilment Centre in Erith in order to help it grow its online offer. This would see Ocado technology used to offer a “store pick solution” for Morrisons, which would boost coverage across the UK.

However the retailer noted this “amended agreement” was subject to detailed terms being agreed and “there can be no certainty that an agreement will be concluded”. This would be contingent on MOrrisons achieving “profitable growth online”.

The original £216m Ocado deal was struck by ousted chief-exec Dalston Philips in 2013, but rumours has rumbled in the press about it being a tense relationship, with Morrisons reportedly unhappy at Ocado’s lack of coverage in the north of England and Scotland.

In January, the Daily Mail reported that Amazon was contemplating buying Ocado in order to beef up its Amazon Pantry offer.

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