Morrisons' bounce back shapes up with same-day delivery Amazon tie-up (but it's bad news for Ocado's share price)

Rebecca Smith
Morrisons is shaping up
Morrisons is shaping up (Source: Getty)

The dream team is very much in business.

Yes, that's right: Amazon and Morrisons have developed their tie-up to launch the aptly named Morrisons at Amazon service. But it's bad news for Ocado: shares were down 9.4 per cent by the early afternoon. Ouch.

From today, Amazon Prime customers in selected areas can order a full Morrisons shop online via the Prime Now app. Orders will then be picked at a local Morrisons store and delivered the same day by Amazon, either within one hour (that'll set you back £6.99) or in a two hour slot for free.

It will launch in selected postcodes within London and Hertfordshire.

Read more: Analysts welcome a full year of growth for Morrisons

The initiative widens the Morrisons wholesale supply services available to Amazon customers. It launched in June and has since been rolled out to thousands of Morrisons products.

The supermarket said the developments were "capital light" for it and, while still early days, should go some way to contributing to the £50m-£100m incremental profit opportunity it identified in its 2015/2016 preliminary results.

David Potts, Morrisons' chief executive, said: "As food maker and shopkeeper, we have unique skills to help build a broader new Morrisons through capital light growth. Morrisons at Amazon is another exciting joint opportunity and makes Morrisons' good quality, great value-for-money products available to even more customers."

Read more: #Marmitegate is back - but this time it's at Morrisons

The supermarket has so far reaped the rewards of being associated with Jeff Bezos' e-commerce behemoth. In February, when it was revealed Morrisons had secured a major agreement with Amazon to sell hundreds of products via Prime Now and Pantry, its share price soared 5.4 per cent.

Amazon's launch of the food delivery service Pantry created a new headache for the nation's supermarket stalwarts, already battling the rise of German discounters Lidl and Aldi.

The tie-up with Amazon was part of Morrisons' six-pillar turnaround plan "to make the supermarket strong again", allowing the firm to grow volumes while still remaining capital light.

Earlier this month, the supermarket announced like-for-like sales were up 1.6 per cent in the third quarter, marking a year of positive same-store sales.

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