Published On: Mon, Feb 29th, 2016

Amazon Agrees Deal To Use Morrisons As Wholesale Food Supplier

Amazon Pantry

Amazon Prime Now and Amazon Pantry customers will have access to Morrisons products.

Morrisons (LON:MRW) and Amazon (NASDAQ:AMZN) this morning announced a new supply agreement allowing Amazon Prime Now and Amazon Pantry customers availability to Morrisons products.

In the statement Morrisons said it will provide a supply service to Amazon on a wholesale basis to offer Amazon’s customers the choice of “a wide range of Morrisons ambient, fresh and frozen products”.

David Potts, Chief Executive, said of the Amazon agreement:

“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.

“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.”

Morrisons said that the move is a part of its six priorities to make their supermarkets strong again whilst building a broader business which compliments their existing supermarkets in the aim of capital light growth. By enabling volumes and leveraging existing manufacturing and distribution capabilities the business said this would enable them to do so on a low cost basis.

In addition to the announcement Morrisons has agreed with Ocado to expand and an “agreement in principle” has been met. The supermarket will be taking space in Ocado’s new Customer Fulfilment Centre (“CFC”) in Erith. Through the new agreement is aiming to serve customers across Great Britain.

The Erith CFC is expected to begin operation in 2017 with a capacity of 210,000 orders per week.

Tim Steiner, CEO of Ocado, said:

“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 profitably, in a grocery market where channel shift is now an unquestionable reality.

“This potential deal demonstrates Ocado has the technology and know-how to help partners grow their online businesses rapidly and successfully, and take advantage of consumers’ increasing desire for the convenience, choice, quality and value offered by online shopping and enabled by the Ocado Smart Platform”.

The current agreement is subject to detailed terms and it was highlighted in the statement that the new plan will only go ahead if it offers Morrisons profitable online growth.

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