Morrisons today announced a new partnership with Amazon which will see the grocer supply the online retailer with a range of fresh, ambient and frozen products. The products will be available to Amazon Prime Now and Amazon Pantry customers and marks the first time Amazon has sold fresh products via its site.

A second announcement by the grocer will further the growth of Morrisons.com with an extended partnership with Ocado, in which Morissons will take some space in the Ocado’s new fulfilment centre in Erith. Additionally, Ocado will deliver a store-picking solution for Morrisons. Mintel’s Director of Retail Research, Richard Perks, analyses the significance of the partnerships.

Two announcements today and, as so often with announcements about online, they need to be treated with some caution. First, the Morrisons deal with Ocado is a necessary second step in maximising coverage. Until now, Morrison’s online offer has not been available south of the Thames, so that’s a big step forward, but one that must have been assumed when the deal with Ocado is signed.

Second the Morrisons deal with Amazon. This appears to be completely independent of Ocado. Morrisons will just be supplying its products to Amazon which, it seems, will be handling the distribution itself. For Amazon the deal has the advantage of being associated with one of the big five supermarkets which have proved to be the ones that customers want to use if they are going to shop online. The strength of the Morrisons brand should support the Amazon offer and engender a degree of trust in it. In that respect it is similar to Ocado’s deal with Waitrose which has underpinned Waitrose’s success. There should also be a boost to Morrisons’ buying power.

This deal is significant because it takes Amazon beyond just ambient temperature, long life groceries into fresh and chilled products and that means a major investment in distribution capability, unless Amazon were to buy Ocado. We have said this before, but we still think that if Amazon is serious about online grocery, and this move suggests that it is, then it should bid for Ocado. The added benefit of such a move would be to give it the distribution technology that it could use elsewhere in the world. Exciting times in online grocery and there are many important issues to be resolved.

Mintel’s upcoming Online Grocery UK 2016 report, providing an in-depth look at the development of the sector, will be published in March.

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