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| Morrisons signs deal to sell food to Amazon customers | Morrisons signs deal to sell food to Amazon customers |
| (about 1 hour later) | |
| Morrisons will supply groceries to Amazon customers in the UK under a new deal with the US online giant. | Morrisons will supply groceries to Amazon customers in the UK under a new deal with the US online giant. |
| The supermarket said it will supply products for the Amazon Prime Now and Amazon Pantry services. | The supermarket said it will supply products for the Amazon Prime Now and Amazon Pantry services. |
| Amazon Pantry was launched in the UK last year, escalating competition with the big four supermarkets, but did not offer fresh food. | Amazon Pantry was launched in the UK last year, escalating competition with the big four supermarkets, but did not offer fresh food. |
| Under the new deal, Morrisons will supply fresh, frozen and non-perishable goods to Amazon customers. | Under the new deal, Morrisons will supply fresh, frozen and non-perishable goods to Amazon customers. |
| The expanded Amazon service will be available later this year. | The expanded Amazon service will be available later this year. |
| Analysts at Shore Capital said there was "strategic merit" in Morrisons exploring a commercial tie-up with Amazon. | Analysts at Shore Capital said there was "strategic merit" in Morrisons exploring a commercial tie-up with Amazon. |
| Ocado has a 25-year agreement with Morrisons to run the supermarket's online delivery service. | Ocado has a 25-year agreement with Morrisons to run the supermarket's online delivery service. |
| The supermarket also said it will expand the geographical coverage of Morrisons.com by taking space in Ocado's distribution centre in Erith, southeast London. | The supermarket also said it will expand the geographical coverage of Morrisons.com by taking space in Ocado's distribution centre in Erith, southeast London. |
| However, Morrisons said of the Erith deal: "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." | However, Morrisons said of the Erith deal: "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." |
| Shares in Ocado fell 8% to 264.5p, while Morrisons' shares rose 4.4% to 196.2p. | |
| David Potts, chief executive of Morrisons, said: "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." | David Potts, chief executive of Morrisons, said: "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." |
| Analysis: Simon Jack, business editor | Analysis: Simon Jack, business editor |
| This agreement will sound a warning to the big online grocers that Amazon means business as a destination for UK online grocery shopping. | This agreement will sound a warning to the big online grocers that Amazon means business as a destination for UK online grocery shopping. |
| It has a relatively small fresh food delivery business called Amazon Pantry, but this tie-up with Morrisons gives the US firm a much firmer foothold. | It has a relatively small fresh food delivery business called Amazon Pantry, but this tie-up with Morrisons gives the US firm a much firmer foothold. |
| Morrisons, which was relatively late to online delivery, has little to lose from the deal as it has just 3% of that market, but will worry market leader Tesco. | |
| Morrisons will also gain an important new channel for its food manufacturing business. It will further sour the relationship Morrisons has with Ocado, which supplies delivery services under the supermarket's brand. | Morrisons will also gain an important new channel for its food manufacturing business. It will further sour the relationship Morrisons has with Ocado, which supplies delivery services under the supermarket's brand. |
| David Potts, Morrisons chief executive, is unhappy with the deal struck by his predecessor, Dalton Philips, which was always a strange fit as the Ocado network does not serve key areas such as the north of England and Scotland - the supermarket's heartland. | |
| There is a crumb of comfort for Ocado in that Morrisons has agreed to take up capacity in Ocado's new "fulfilment centre" in Erith, southeast London - a move it had been delaying. However, that will be eclipsed by the boost this deal will give Amazon's designs on the UK grocery market. | There is a crumb of comfort for Ocado in that Morrisons has agreed to take up capacity in Ocado's new "fulfilment centre" in Erith, southeast London - a move it had been delaying. However, that will be eclipsed by the boost this deal will give Amazon's designs on the UK grocery market. |