Guardian - Nice Piece16 Nov 2016 23:53
It’s a strange sort of “exclusivity” deal that allows you to jump into bed with whoever takes your fancy. But Morrisons insists its tie-up with Amazon doesn’t infringe upon the contract it signed with Ocado. In the new “Morrisons at Amazon” operation, it is acting as a wholesaler supplying the US titan. By contrast, Morrisons is the customer in the arrangement whereby Ocado operates the morrisons.com website.
Confused? One assumes David Potts, Morrisons chief executive, had his lawyers check every possible wrinkle before signing with Amazon. If he is indeed on solid ground, one can understand why Ocado’s share price tumbled 8.5%. Life has become even trickier for the Hatfield-based technology whizzes.
Ocado still relies on one big supplier, Waitrose, for goods for its own online operation; but Waitrose operates a competing service and shows occasional signs of having itchy feet. Now Morrisons, the only firm to pay to use Ocado’s kit, is getting cuddly with Amazon.
On the plus side, “Morrisons at Amazon” seems aimed primarily at commuters who can’t be bothered to visit a shop on their way home and are willing to pay £6.99 to have their evening grub delivered within the hour. On the other hand, there is a free same-day offer for those prepared to wait a little longer and the range of Morrisons goods runs to “thousands” of lines. That, potentially, is more dangerous from Ocado’s point of view.
It is a trial, confined to “selected” postcodes in London and Hertfordshire, so could yet fizzle out. But it will probably make it harder for Ocado to sell its services to those overseas retailers it has been wooing for ages. None has signed so far and now Morrisons has invented a new online model for supermarkets – being a wholesaler to Amazon.
Mind you, Potts shouldn’t spend too much time congratulating himself on his own cleverness. The point about being a wholesaler is that you can’t dictate retail prices. If Amazon tries to undercut Morrisons on Morrisons-branded goods, he has a problem. There is also a moral for all supermarkets: the Amazonian beast is inventive and intends to hang around.
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