Amazon expands Morrisons grocery delivery deal

Amazon will offer one-hour delivery of groceries sourced from Morrisons stores to selected postcodes in London and Hertfordshire.

The online retail giant said Amazon Prime Now customers in the selected areas could have their baskets delivered within 60 minutes for £6.99.

Alternatively, customers can pick a two-hour delivery slot for no charge.

Amazon's tie-up with Morrisons began in June, but the latest agreement expands the range available.

David Potts, chief executive of the supermarket, said the deal would help to boost profits without requiring significant capital outlay.

Shares in Morrisons rose 0.6% to 223.3p in morning trading in London, valuing the company at almost £5.2bn.

The stock has risen almost 50% this year.

'Innovative' deal

As well as the "Morrisons at Amazon" service, Amazon also offers products from wine merchant Spirited Wines and pharmacy chain John Bell & Croyden.

"We look forward to adding more stores and reaching more customers in the future," said Prime Now EU director Mariangela Marseglia.

Analysts at Shore Capital described the latest stage of Morrisons' deal with Amazon as "innovative" and said it would boost the supermarket chain in areas where it had little foothold.

"With its low market share and especially shallow reach in London and the South East, through Amazon Prime customers, the Morrison brand can gain welcome extension," Shore Capital added.

Amazon is a relative latecomer to the UK online grocery market, which is dominated by the country's big supermarket chains and online-only retailer Ocado.

Shares in Ocado fell more than 6% on Wednesday and have shed more than a fifth over the past 12 months.

However, ETX Capital analyst Neil Wilson said the tie-up was a "game-changer" for the sector and gave Morrisons "a massive edge over Tesco and Sainsbury in the home delivery market".

In order to obtain one-hour deliveries from Amazon, customers in eligible areas have to sign up for membership of its Amazon Prime service, which costs £79 a year.