Amazon seals Morrisons tie-up to start an online shopping war

AMAZON is to start selling fresh food online in a tie-up with Morrisons, which poses a serious threat to traditional supermarkets.

The company launched Amazon Pantry, which offers big brands including Colgate, Kellogg’s and Ariel, in November.

Shoppers will be able to buy fresh produce, meat, fish and frozen food from Morrisons on Amazon.

The partnership will make Amazon a one-stop option for the weekly shop, and it is thought the company will – in some instances – offer same day delivery. Amazon offers fresh food under the Amazon Fresh brand in some US cities, and it is understood to be working on bringing the concept to the UK.

The move turns up the heat on Tesco, Sainsbury’s and Asda in terms of snatching away sales at a time they are already threatened by budget chains Aldi and Lidl. It is a blow for Ocado, which has a home delivery partnership with Morrisons. Shares in Ocado tumbled nearly 8pc (21.9p) to 260p on the news.

Bosses at Morrisons believe the gamble of joining forces with a potential rival is worthwhile because it will allow the chain, which is based in Yorkshire, to boost sales in areas where it does not have stores or its own online shopping service. Chief executive David Potts said the combination of the supermarket’s fresh food expertise and Amazon’s online and logistics capabilities was ‘compelling’.

It is not known when Amazon will begin selling Morrisons food, or in which parts of the country the products will be available at first.

Significantly, just as Amazon is trying to take a bite out of supermarkets, Sainsbury’s is launching a counter-attack. It has tabled a £1.3bn bid for the owner of Argos in an attempt to become a ‘world-leading’ retailer.

As well as working with Amazon, Morrisons is taking space in Ocado’s new online shopping warehouse in Erith, South East London, to sell more products under its own-brand via its internet store. There have been rumours Amazon might try to buy Ocado outright. However, so far these have come to nothing.

Retail analyst Clive Blasack of Shore Capital said just as Waitrose supplies products to Ocado, so Morrisons (up nearly 6pc, or 11.1p, to 199p) will have a similar relationship with Amazon.