UK-based supermarket chain Morrisons has announced a licensing partnership with online grocery retailer Ocado Group to enable Morrisons to launch its online grocery business by January 2014.
This licensing agreement allows Morrisons to access Ocado’s technology, software and expertise to support the creation of its own online grocery shopping service. The business model will combine Morrisons affordable fresh food – much of it from the company’s own manufacturing facilities – with Ocado’s end-to-end technology, logistics and distribution operations. On an annual basis, Morrisons will pay service costs and a contribution to R&D expenditure. Ocado will receive a share of the positive earnings before interest and tax (EBIT) of Morrisons.com.
“This agreement is a significant strategic step for Morrisons. From a standing start, Morrisons will be competing in the fast growing online channel by the end of this year with a really compelling proposition. The customer gets our affordable fresh food delivered by Ocado’s state of the art distribution system. I’m confident that Morrisons.com will grow over time to be an operation of real scale and significance whilst creating meaningful long-term value for Morrisons shareholders,” says Dalton Philips, CEO, Morrisons.