LONDON (Alliance News) - Wm Morrison Supermarkets PLC on Monday said it has entered a new supply agreement with US online retail giant Amazon.com Inc and has agreed new terms in principle with online grocery delivery company Ocado Group PLC.
Morrisons said it has struck a new supply agreement with Amazon, through which its products will be made available to Amazon Prime and Amazon Pantry, Amazon's food service, customers. Morrisons will provide a wholesale supply services to Amazon, allowing customers of Amazon to access a wide range of Morrisons ambient, fresh and frozen products.
Amazon Pantry currently provides only packaged food.
"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," said David Potts, Morrisons' chief executive.
"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 added.
In addition, Morrisons has been in talks with Ocado to grow its Morrisons.com online grocery business and the pair have now reached an agreement in principle under which Morrisons will take space at Ocado's new Customer Fulfilment Centre in Erith and Ocado will deliver a "stock pick" service to Morrisons.
This, Morrisons said, will allow its online service to delivery groceries to customers across the UK. No financial details on the agreement were disclosed, and Morrisons said there is no certainty an agreement can be concluded.
Morrisons and Ocado first entered into an online grocery fulfilment deal in 2013, with Morrisons sharing capacity at Ocado's Dordon centre. Ocado said the new deal is structured similarly to the original agreement, with lower upfront capital costs and with ongoing fees to be paid by Morrisons dependent on capacity.
"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," said Tim Steiner, Ocado's chief executive.
"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," he added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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