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Amazon announced this morning that it has made a deal with William Morrison Supermarkets in the UK that will make "hundreds" of Morrison's products available via both the one-hour Prime Now and Amazon Pantry services.

At the same time, according to a story in the Wall Street Journal, "Morrison's said that it has agreed on the broad terms of a deal with online-only grocer Ocado Group PLC, whose technology and equipment Morrisons has licensed since 2013.

"Morrisons will take space in Ocado’s new warehouse, currently under construction in southeast London. Ocado will give Morrisons the software needed to fulfill online orders from stores that aren’t serviced by an Ocado warehouse. The deal - which would allow Morrisons to sell to customers all over Britain - is being finalized and could still fall apart."

The Journal story goes on to say that "Amazon’s moves to build its presence in the U.K. come as the country’s online-grocery market continues to boom, with penetration higher than in most other developed countries ... The Seattle-based online retailer has long been widely expected to launch a full grocery service in the U.K., which is already home to fierce competition online among mainstream grocers such as Tesco, Sainsbury’s and Wal-Mart Stores Inc. ’s U.K. business Asda - all of which offer home delivery and 'click and collect' services. The mainstream grocers have been losing market share to discount supermarket chains Aldi and Lidl, neither of which offer home delivery as yet."
KC's View:
It is interesting to me that Morrison's has a two-pronged approach to e-commerce, engaging with both Amazon and Ocado at the same time ... sometimes it makes sense to cover your bets and see what works best.

The broader lesson here is that one cannot afford to leave any weapons on the table in the current competitive climate. The folks at Morrison's seem to understand that ... and I'd suggest that it won't be long before Aldi and Lidl both launch their own, differentiated versions of e-grocery. It's dog-eat-dog in the UK, and this is a lesson that US retailers have to take to heart.

I saw a comment the other day from a regional supermarket CEO in which he said that he thought that Aldi would have only a "minimal impact" on his company. Forgive me, but I think this is incredibly shortsighted ... I think that pretty much every food retailer has to work on the assumption that competitors from every angle - Aldi, Lidl, Amazon, etc... - are positioned to have maximum impact on their companies, and then to arm themselves for the battles that will ensue.