Morrisons, the number four supermarket chain in the UK, has signed a deal with web giant Amazon to supply fresh produce for its Amazon Prime Now and Amazon Pantry home grocery delivery services, which are expected to start up later this year.
Amazon Pantry was officially launched last year, but only offered non-food groceries. Under the new deal, however, “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,” claimed the supermarket chain in a statement this morning.
The initiative will be rolled out in a matter of months, it added.
Morrisons CEO David Potts described the deal as a “low risk and capital light wholesale supply arrangement” for the supermarket chain.
The deal between the two companies follows news in August last year that Amazon had leased a massive warehouse within London’s M25 belt, fuelling rumours that it planned to take on the supermarket giants in grocery home delivery. The warehouse in the Brooklands Business Park in Weybridge, Surrey, was previously used by supermarket chain Tesco as a distribution centre.
Amazon appraised potential suppliers of its plans in a series of presentations during 2015, but lacked the food production capabilities and supply chain to provide a complete grocery service when it started up Amazon Pantry last year.
At the same time that the Amazon deal was unveiled, Morrisons also revealed plans to extend its agreement with online grocery retailer Ocado, with plans to take space at Ocado’s new customer fulfilment centre in Erith, north Kent. The deal would enable Morrisons to extend its online home delivery service to south London and out across Kent and Surrey.
Morrisons already has a 25-year deal with Ocado to provide fulfilment for its home delivery service, but Morrisons supply deal with Amazon may have an impact on Ocado’s own business.