Hundreds of the chain’s groceries will be available on Amazon’s one-hour delivery service Prime Now and on Amazon Pantry over the coming months, reports The Times.
Wm Morrisons shares jumped 6 per cent – or 11.50p – to 199.42p in early trading.
The deal will underpin Morrisons’ better-than-expected Christmas performance when sales at stores open for a year or more rose 0.3 per cent. It will also help as it battles in a sector that is in the grip of a price war due to increased competition from discounters.
David Potts, the chief executive of Morrisions, said: “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.”
Shares in Ocado, which has an supply deal with Morrisons, fell 4.5 per cent in early trading to 289p, as traders and investors viewed the Amazon agreement as a blow for the online grocer. Ocado’s shares have been under pressure since Amazon said last year that it planned to expand its British grocery delivery service rapidly in the new year. In America, the company’s Amazon Fresh service offers about 20,000 chilled, frozen and perishable goods.
Ocado announced today that it had agreed headline terms with Morrisons for the chain to share some of the capacity of Ocado’s distribution centre that is currently under construction in Erith, southeast London.
However, Morrisons said the amended agreement was subject to detailed terms being agreed and would only proceed if it enabled it to “achieve profitable growth online. “There can be no certainty that an agreement will be concluded,” Morrisons said in a statement.
Amazon has been offering Amazon Prime members, who pay an annual fee of £79, packaged groceries since November.
An Amazon spokesman said: “Prime Now is currently available to Prime customers in London, Birmingham, Newcastle, Manchester and Liverpool. Customers have access to more than 15,000 items via the Prime Now app with the option of delivery within one hour for £6.99, or free delivery within a choice of two-hour, same-day delivery slots between 8am and midnight, seven days a week.
Amazon Pantry is a nationwide service available to Prime customers offering more than 5,000 low-priced products, including food and drink, household supplies, baby and childcare, pet, and health and beauty products.
“Customers can fill up as much or as little of an Amazon Pantry box as they wish for one-day delivery with a £2.99 fee for the first box and 99p for each additional box in the same order,” the spokeman said.
