Amazon and Morrisons strike food supply deal

Hundreds of Morrisons fresh and frozen food products will be available to order from Amazon in the coming months, after the US online retailer struck its first supply deal with one of the UK’s ‘big four’.

Morrisons said on Monday that the deal would allow Amazon Prime Now and Amazon Pantry customers – who pay an annual fee – to access their food products, after fighting off competition from Aldi and Lidl [1].

Amazon had previously been limited to selling non-perishable items, although the US company is preparing for the launch of Amazon Fresh in Britain later this year, having successfully tested the waters in London at the end of last year [2].

Morrisons’ Chief Executive, David Potts, said: “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” [1].

Shares in Morrisons were up 4% to 195.2p on the morning of the news breaking [3].

Analysts said the deal was a good move for Morrisons, but warned that supermarkets have suffered from strong competition in recent years, and this move could damage the sector even further.

Amazon, meanwhile, has big plans for the UK food market, and is thought to be eyeing up the restaurant delivery sector, currently being serviced by the likes of Just Eat, Deliveroo and Hungry House.

Neil Campling, Analyst at Aviate Global, said of Amazon conducting surveys about UK customers using restaurant delivery services: “These stealth tactics have been used carefully in the United States to do [something] similar and launch successfully, and the UK is often used as the first international market” [3].

Morrisons entered the online grocery market three years ago with a £210 million deal with Ocado, but the service is only available to limited locations across the country [4].

Details of the deal remain confidential, but sources say both sides hope for a long relationship.

[1] Financial Times. ‘Morrisons and Amazon strike food supply deal in UK’.
[2] The Guardian. ‘Amazon enters fresh food market with Morrisons deal’.
[3] This is Money. ‘Morrisons shares spike after signing fresh food and frozen products deal with Amazon, and expanding online service with Ocado’.
[4] Evening Standard. ‘Amazon’s deal to sell Morrisons products hammers Ocado’.