Morrisons expands home delivery service with Ocado

Supermarket Morrisons is expanding its home delivery service nationwide and offering non-food products to online customers for the first time under a new deal with partner Ocado.

Morrisons said the nationwide roll-out will not happen this year. Picture: Lisa Ferguson
Morrisons said the nationwide roll-out will not happen this year. Picture: Lisa Ferguson

The UK’s fourth-biggest grocery chain has renegotiated its agreement with the online supermarket to allow it to store-pick orders, doubling the reach of its delivery.

Morrisons.com serves around half of UK households, largely across central England, but currently does not deliver to Scotland or the south-west of England.

From Ocado’s centre in Warwickshire, it is currently able to deliver to around half of UK households – stretching as far north as Leeds and as far south as Bristol. The new deal will see it extend its reach by allowing items to be picked up from nearby stores for home delivery, as well as from Ocado’s new customer fulfilment centre in Erith, south-east London.

The company said it will take some time to offer home delivery right across the UK and the roll-out certainly will not happen this year. It added that the store picking plans will take time to launch and added that the new Erith centre is not due to be completed until 2018.

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Morrisons chief executive David Potts said: “The new investments in online growth are further examples of Morrisons building a broader business and will allow millions more customers all over Britain to enjoy Morrisons’ good-quality fresh food and great value for money.”

The grocer said it was adding thousands of non-food items currently sold on Ocado to its delivery service, including well-known kitchen equipment brands.

As well as launching a store-pick service for home delivery orders, Bradford-based Morrisons has also previously announced it would take up space at Ocado’s new customer fulfilment centre in Erith, which will boost its reach.

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But the extra investments will see Morrisons.com remain loss-making for slightly longer, the supermarket confirmed, although it is expected to be a key part of Potts’ plans to boost group profits by up to £100 million in future years.

The renegotiated terms of its deal with Ocado will also see Morrisons end its profit-sharing agreement once the store-picking service is up and running.

Ocado will likewise see fewer restrictions that currently prevent it from working with other retailers, although it has still agreed not to partner with major players Tesco, Asda, Sainsbury’s and discounters Aldi and Lidl.

The expansion of Morrisons.com comes as the chain stages a fightback against its rivals after being slow to join the race online. It signed a £170m contract with Ocado in 2013, providing the chain with its first online delivery service.

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It also joined forces with Amazon, allowing the internet giant to deliver fresh and frozen food products for the first time. AmazonFresh launched in June and is now available to customers in 128 postcodes across London who are members of its Prime subscription service.