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Amazon Enters Fresh Food Market with Morrisons Deal

Amazon has struck a wholesale supply deal with British supermarket Morrisons that will help the online retailer step up its food offering in Britain with fresh and frozen products.

Morrisons, Britain's fourth biggest supermarket, said on Monday the deal would allow hundreds of Morrisons products to be available to Amazon Prime Now and Amazon Pantry customers in the coming months.

The British supermarket sector has been convulsed by fierce competition in recent years and analysts have warned that a step up from Amazon could hurt the traditional players even more.

In November Amazon launched a packaged groceries offer for Amazon Prime members, who pay an annual fee of 79 pounds ($109.79).

That was its most ambitious foray into Britain's growing online grocery market but it stopped short of replicating its broader U.S. Amazon Fresh service, which offers about 20,000 chilled, frozen and perishable products and items from local shops.

Shopping trolleys stand outside a Morrisons supermarket in Liverpool, northern England
Shopping trolleys stand outside a Morrisons supermarket in Liverpool, northern England. REUTERS/Phil Noble

Retail analysts have speculated the U.S. company was gearing up for a launch of Amazon Fresh in Britain this year.

"The combination of our fresh food expertise with Amazon's online and logistics capabilities is compelling," said Morrisons Chief Executive David Potts. "This is a low risk and capital light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business. We look forward to working with Amazon to develop and grow this partnership over the coming months."