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February 29, 2016updated 21 Oct 2016 5:36pm

Amazon grocery deal with Morrisons throws light on Ocado Smart Platform contract

News: Agreement between web giant and the UK's fourth biggest grocery is signed while disputed contract with tech platform supplier Ocado is amended

By Sam

Amazon has signed its first big UK grocery supply deal which will see it sell products from UK retailer Morrisons.

A statement about deal included some details on an amended agreement between Morrisons and supplier Ocado with whom it had previously signed a 25 technology deal covering and the Ocado Smart Platform, an automated supply chain for very large grocery retailers.

That deal was Ocado’s first independent deal when it was signed was to see Morrison’s online business, run on the Ocado Smart Platform with logistics fulfilled through its more famous delivery vans.

That deal subsequently became a basis of dispute between both companies with management on both sides issuing statements about the implications of the signed contract.

Today’s statement from Morrisons covering the Amazon deal, said: "In addition, Morrisons has been in discussions with Ocado to grow and an agreement in principle has been reached. This involves Morrisons taking space in Ocado’s new Customer Fulfilment Centre ("CFC") in Erith, and Ocado delivering a store pick solution for Morrisons that leverages Ocado’s technology and Morrisons store assets. When implemented, this would enable, working with Ocado, to sell to customers all over Great Britain."

"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."

In a statement issued today February 29th, Morrisons and Amazon said they were announcing a new supply agreement which would make Morrisons products available to Amazon Prime and Amazon Pantry services.

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"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," the statement said.

We are focussed on our six priorities to make the supermarkets strong again. In addition, we have an opportunity to build a broader business that complements our supermarkets and is consistent with our commitment to pursue capital light growth. Wholesale supply enables this by growing volumes and leveraging our manufacturing, distribution and wholesale capabilities.

David Potts, Chief Executive, said of the Amazon agreement: "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.

"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."

Since the start of 2016 there have been numerous rumours of a deal between Ocado and Amazon, with some observers going so far as to suggest a takeover of the technology division of Ocado by the web giant was a possibility.

Read the CBR interview with Paul Clarke, Ocado CTO, the man leading the development of Ocado Smart Platform.

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