Monday, 29 February 2016

Morrisons shares jump 6.5% after securing Amazon deal

In isolation the Amazon tie-in looks like a superb strategic opportunity for Morrisons. It gives the retailer significant online exposure to Amazon's which is especially valuable given how much it has lagged the competition in this channel in the past. However, we have heard this before and Morrisons' tie-in with Ocado, the other big name in UK online retail, was also announced two years ago with high expectations that have yet to reach fruition. 

That the Amazon deal comes in conjunction with a renegotiation of the Ocado deal highlights the complexity Morrisons faces in selling through two online suppliers who are in competition with one another. Speculation has also mounted over a potential Amazon takeover of Ocado in 2016, but with Amazon moving into physical retail in North America it could be that the pure player will ultimately seek to deepen its UK presence using Morrisons stores. This is a welcome show of support for Morrisons given the travails of the grocer in recent years.

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