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Morrisons Super Markets signs deal to sell food to Amazon online customers

Morrisons will supply groceries to Amazon customers in the UK under a new deal with the US online giant.
The supermarket said it will supply products for the Amazon Prime Now and Amazon Pantry services.
Amazon Pantry was launched in the UK last year, escalating competition with the big four supermarkets, but did not offer fresh food.
Under the new deal, Morrisons will supply fresh, frozen and non-perishable goods to Amazon customers.
The expanded Amazon service will be available later this year.
Introducing Amazon Prime Pantry

Analysts at Shore Capital said there was "strategic merit" in Morrisons exploring a commercial tie-up with Amazon.
Ocado has a 25-year agreement with Morrisons to run the supermarket's online delivery service.
The supermarket also said it will expand the geographical coverage of Morrisons.com by taking space in Ocado's distribution centre in Erith, southeast London.
However, Morrisons said of the Erith deal: "This amended agreement is subject to detailed terms being agreed and will only proceed if it enables Morrisons to achieve profitable growth online. There can be no certainty that an agreement will be concluded."
Shares in Ocado fell 6.2% to 264.5p, while Morrisons' stock rose 4.4% to 196.2p.
David Potts, chief executive of Morrisons, said: "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."


This agreement will sound a warning to the big online grocers that Amazon means business as a destination for UK online grocery shopping.


It has a relatively small fresh food delivery business called Amazon Pantry, but this tie-up with Morrisons gives the US firm a much firmer foothold.


Image copyright
Image caption
Amazon already sells groceries to US customers

Morrisons, which was relatively late to online delivery, has little to lose from the deal as it has just 3% of the market, but will worry market leader Tesco.
Morrisons will also gain an important new channel for its food manufacturing business. It will further sour the relationship Morrisons has with Ocado, which supplies delivery services under the supermarket's brand.

David Potts, Morrisons chief executive, is unhappy with the deal struck by his predecessor, Dalton Philips, as the Ocado network does not serve key areas such as the North and Scotland - the supermarket's heartland.


There is a crumb of comfort for Ocado in that Morrisons has agreed to take up capacity in Ocado's new "fulfillment centre" in Erith, southeast London - a move it had been delaying. However, that will be eclipsed by the boost this deal will give Amazon's designs on the UK grocery market.

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