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Morrisons and Amazon to expand home delivery service to more UK cities

The announcement comes a month after Morrisons loosened an exclusive arrangement with Ocado

Morrisons
“Morrisons at Amazon” service is currently available in four UK cities

WM Morrison Supermarkets PLC (LON:MRW) and Amazon.com Inc (NASDAQ:AMZN) are expanding their same-day online grocery delivery service to more cities across the UK.

Morrisons said on Thursday’s that its “Morrisons at Amazon” home delivery service would be rolled out to at least five more cities this year.

The service, which started in 2016, sells Morrisons’ groceries on Amazon’s Prime Now platform and is currently available in Leeds, Manchester, Birmingham and parts of London.

READ:  Morrisons suspends deal with Ocado for capacity at Erith after fire destroys Andover warehouse

New Ocado agreement gives Morrisons more freedom

A previous exclusive arrangement with online grocer Ocado had prevented Morrisons from expanding further but last month the companies loosened the terms of their deal.

The two struck the new deal after a fire at one of Ocado’s warehouses earlier this year meant the online grocer needed to take back distribution space that had been used for Morrisons orders.

The new arrangement gave the supermarket group more flexibility to sell directly through other online platforms.

Morrisons chief executive David Potts said: "Amazon has been a valued partner of Morrisons for over three years, and we are pleased to be expanding our relationship together.

“Continuing to partner with the best digital operators such as Amazon is a significant, capital light growth opportunity for Morrisons."

"Morrisons at Amazon" will be rolled out to cities including Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth this year.

Shares in Morrisons rose 1% to 197p in morning trading. 

Nationwide rollout a 'major step up for Morrisons', says analyst

Neil Wilson, chief market analyst at Markets.com, said the extended deal between Morrisons and Amazon was "nothing fundamentally the market didn’t anticipate here".

"But having trialled out the service in key locations, the nationwide rollout is a major step up for Morrisons and a sign that a) the service is delivering and fundamentally is a success, and b) ties with Amazon remain firm," he said.

He added: "MRW shares rose c1% to around 197p but valuations remain depressed as the market has decided the steady growth under Dave Potts is just about run its course – the tie-up with Amazon will matter more and more.”

 

-- Adds share price and analyst comment --

Quick facts: WM Morrison Supermarkets PLC

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LSE:MRW
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