Marks & Spencer is seeking to enter a partnership with online supermarket Ocado in a bid to bring its ready meals and other food items to internet shoppers, said a recent BBC report. The home delivery service is expected to go live next year.
According to the information, M&S will buy a 50% share of Ocado’s retail business for GBP750m. Under the deal, shoppers will be able to order more than 4,5000 M&S from Ocado, alongside the online platform’s own-label goods and big name branded items. However, outside the online food delivery sector in the UK, M&S and Ocado will continue to trade separately.
Ocado has previously signed an agreement with Waitrose, to distribute about 4,500 goods supplied by the supermarket chain online. The deal is due to expire on September 2020, at which point, Waitrose customers will be forced to either switch to M&S goods and continue using Ocado or switch to Waitrose.com.
According to M&S’s Chief Executive Steve Rowe, current Ocado customers stand to benefit from the deal, as Marks and Spencer’s products are on average cheaper than their Waitrose counterparts. Moving forward, M&S plans to bring one third of its business online.
M&S’s business has been hampered by not having an online delivery service, said the report. But the new Ocado deal hopes to solve this issue by offering customers a complete online shopping experience. However, the announcement was received with skepticism by M&S shareholders, as shares fell by 10%. Interestingly, Ocado shares rose by 4%.