Amazon (AMZN) is set to shake up Britain's $225 billion supermarket landscape after cutting a deal with Morrisons (MRWSY) , one of the country's Big 4 chains, to include same-day delivery in the fiercely competitive market.
The deal sent shares in first-mover delivery service Ocado (OCDDY) sharply lower in London, after its restrictive business model forced several food retailers to renegotiate contracts.
From Wednesday, Amazon Prime customers in selected areas of England will be able to order a full Morrisons order through the Prime Now app. Customers will then be able to pick it up from a local store on the same day or have it delivered within the hour for a charge of £6.99. There is also an option of free delivery within a two-hour slot on the day. Amazon Prime costs £7.99 a month in the U.K.
Morrisons' stock rose 1.04% to 224.10 pence amid a down market in early London trading, before paring gains to 0.56%. The stock has risen 17.66% in the past three months against a gain of 5.08% for the FTSE 350 retail index.
Since June, Amazon customers have been able to buy hundreds Morrisons products through the website, in a bid by the online retailer to add fresh foods to its grocery range.
Supermarkets in Britain remain in a fierce price war, as low-cost competitors come to market (with bricks and mortar stores). The battle has now turned online as more and more customers rely on grocery delivery.