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Ocado frees warehouse space, Morrisons able to extend Amazon partnership in new deal

Ocado and Morrisons have altered the terms of their agreement, allowing the former to use more of its own warehouse space and the latter to extend its partnership with Amazon.

The agreement will see Morrisons.com suspending its use of Ocado’s Erith fulfilment centre. Currently it accounts for over 10,000 orders from the site and has the right to use 30% of the centre’s future order capacity.

Morrisons will resume using the warehouse in February 2021. The deal follows the warehouse fire in Andover in February 2019 which saw Ocado lose 10% of its fulfilment capacity.

Morrisons will be able to fulfil orders from store through Ocado’s store pick solutions and will pay lower store pick fees, as well as not having to pay for any of the costs of using the Erith centre.

In addition, the grocers have agreed to relax exclusivity provisions which prevented Morrisons from working with other digital partners such as Amazon. Morrisons is a customer of Ocado’s automation technology, Ocado Solutions.

Tim Steiner, CEO of Ocado, said: “Morrisons is a valued partner of Ocado and we are glad that we have been able to come to an equitable and pragmatic agreement that is in the interests of both parties. We look forward to welcoming Morrisons back to Erith in February 2021.”

David Potts, CEO of Morrisons, said: “We are pleased to be helping our partner in times of need after the recent fire. We will keep growing Morrisons.com for our customers and save some cost, returning to the Erith CFC when it is more mature.

“Our new agreement allows us to have more than one digital partner, and opens the way for significant potential opportunities and partnerships in this important growth area for Morrisons.”

A recent report by Peel Hunt claimed Ocado’s automation solution was more advanced than Amazon’s.

The company revealed last week that a malfunction with a charging unit for robots was to blame for the February Andover fire. The circular letter to investors said that a specific type of battery charging on the robotic grid had caused the plastic lid on a robot to catch fire.

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