A new deal will see Morrison’s supplying UK Amazon customers with groceries.
The deal will see Morrisons supply products to both Amazon Prime Now and Amazon Pantry services.
The Pantry service was launched in the UK only last year and is in fierce competition with the big four supermarkets, however its one major downfall is that it does not offer fresh product; until now.
This is all set to change with its deal with the supermarket giant who will supply fresh, frozen and non-perishable goods to Amazon customers.
But this is not the only deal Morrisons currently has in place. In fact they have a 25 year agreement with online supermarket, Ocado to run its online delivery service. It also hopes to expand Morrison’s geographical coverage by using its distribution centre in south east London.
Ocado has also agreed to provide logistics services to Morrisons by arranging online orders to be picked and delivered locally from Morrison’s stores in the North of England.
Tim Steiner of Ocado stated: “We are delighted to have reached an in principle agreement with Morrisons. This is a win-win arrangement which allows both of us to grow faster and more profitable.”
However, Morrisons warned that the deal was not ‘set in stone’: “This amended agreement is subject to detailed terms being agreed and will only proceed if it enables Morrisons to achieve profitable growth online. There can be no certainty that an agreement will be concluded.”
Amazon’s move to online groceries will no doubt start to make the likes of Tesco sweat, who owns over 40% of the online delivery market, whereas due to Morrison’s late emergence into the sector – it currently only holds 3% of the market; it’s a great opportunity to expand.
Morrisons will also gain a new channel for its food manufacturing business and could potentially make it a food wholesaler to Amazon.
David Potts, Chief Executive of Morrisons stated: “This is a low risk and high capital 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.”
But there are suspicions that this new deal with Amazon could damage the relationship between Morrisons and Ocado.
The deal with Amazon will be available in the next few months; so until then, watch this space.
A new deal will see Morrison’s supplying UK Amazon customers with groceries, the deal will see Morrisons supply products to both Amazon Prime Now and Amazon Pantry services.