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Ocado agrees terms for Morrisons to share capacity at new Erith CFC

Monday February 29th 2016

Ocado has agreed headline terms with supermarket chain Morrisons for it to share some of the capacity of Ocado's customer fulfilment centre currently under construction in Erith in south east London.

The online grocer, which already has an agreement to supply Morrisons' online grocery delivery service, said the new terms will provide Morrisons with the software necessary to fulfil online orders from its stores with the aim of offering online services in areas not currently serviced by a customer fulfilment centre.

The two parties are working on the detailed terms of the agreement but said there could be no certainty that an agreement will be reached.

Ocado and Morrisons first entered into their agreement for online grocery fulfilment services in 2013 with Morrisons sharing the capacity of the Ocado’s Dordon customer fulfilment centre.

The Erith facility is due to go-live at the end of 2017 and is expected to have capacity of 210,000 orders per week.

Since the original agreement, Ocado has launched the Ocado Smart Platform. The company said the new terms for capacity in Erith are likely to be structured in a similar way to those offered to international Ocado Smart Platform customers with lower upfront capital costs and ongoing annual fees dependent on capacity.

Tim Steiner, chief executive of Ocado, said: "We are delighted to have reached an in principle agreement with Morrisons. This is a win-win arrangement which allows both of us to grow faster, and more profitably, in a grocery market where channel shift is now an unquestionable reality.

"This potential deal demonstrates Ocado has the technology and know-how to help partners grow their online businesses rapidly and successfully, and take advantage of consumers' increasing desire for the convenience, choice, quality and value offered by online shopping and enabled by the Ocado Smart Platform."