Morrisons is to work with both Amazon and Ocado as it looks to grow its online sales.
The supermarket today announced that hundreds of its products are to be sold through Amazon’s Prime and Pantry services in coming months.
Morrisons will supply fresh, frozen and ambient food products to Amazon on a wholesale supply basis as it looks to build a “broader business that complements our supermarkets and is consistent with our commitment to pursue capital light growth.”
Morrisons chief executive David Potts said: “Today’s agreement is built on Morrisons’ unique strengths as a food maker. The combination of our fresh food expertise with Amazon’s online and logistics capabilities is compelling.”
He said the supermarket looked forward to developing and growing the Amazon partnership in coming months.
Meanwhile, it is renegotiating its agreement with Ocado, which supplies the technology and fulfilment services behind Morrisons.com, to enable pick from store – enabling Morrisons.com to sell to customers all over Great Britain. Morrisons will take space in Ocado’s new Erith, south east London, customer fulfilment centre which is due to go live at the end of 2017. Ocado will provide Morrisons with the software it needs to fulfil orders from stores – enabling Morrisons to serve online customers in areas that are not served by Ocado’s network of fulfilment centres.
However, said Morrisons, the agreement would only go ahead if it enabled it “to achieve profitable growth online”.
Ocado chief executive Tim Steiner said he was delighted with the in principle agreement.
“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,” he said.
Our view: This move by a UK supermarket to sell via Amazon shows how important marketplaces are becoming to all retailers looking to broaden the way they sell their products. Relying on the Ocado fulfilment network couldn’t work for all Morrisons’ customers, so the moves announced today, both with Amazon and Ocado, will enable Morrisons to win more business online.
However, all of this illustrates a big catch up effort for Morrisons, after holding out against ecommerce for so long.