Amazon, Morrisons, Ocado…?

In a twist to the tale of Amazon’s grocery retailing in the UK, Morrisons has done a deal with the online giant to sell their products on Amazon Prime Now and Amazon Pantry.

On the 29 February Morrisons released a statement saying, “Morrisons will provide a wholesale supply service to Amazon, allowing Amazon’s customers access to a wide range of Morrisons ambient, fresh and frozen products.”

David Potts, the Chief Executive of Morrisons, commented: “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.”

Rumours have been rife that Amazon is about to buy online grocery store Ocado. Ocado has been working with Morrisons to develop their online grocery shopping presence, and in the same statement released on the 29th said that this would be developed further. The statement added: “This involves Morrisons taking space in Ocado’s new Customer Fulfilment Centre (CFC) in Erith, and Ocado delivering a store pick solution for Morrisons that leverages Ocado’s technology and Morrisons store assets. When implemented, this would enable, working with Ocado, to sell to customers all over Great Britain.”

Whether the rumours that have emerged come from observers seeing the goings on in this menage a trois and misinterpreting the outcome or whether there will be more to be announced from the three companies remains to be seen. Amazon could do a lot with Ocado… though could do an awful lot with Morrisons too!

Some insiders say that the Morrisons / Amazon tie up could really help Amazon. ParcelHero’s Head of Consumer Research, David Jinks, said: “Amazon’s strategy is to use deliveries to win long-term loyalty from shoppers; luring its customers into its Prime service through free deliveries. The large scale expansion of its Prime Now food service will tempt many more customers to lock in to Prime Membership.”

Jinks added: ‘Our research shows Amazon’s Prime members shop 50% more frequently with the company than non-members and spend an average of £1,000 a year, as opposed to £450 a year for non-members. For consumers who have so far resisted the allure of Prime membership, this huge potential expansion of its food delivery service may prove to be just the hook Amazon needs. And Amazon is also offering exclusive deals for Prime Members on its Pantry service; so it really is a joined up approach.’