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Business Management

Amazon, Morrisons and other odd bedfellows

The recently announced tie-up between Amazon and Morrisons has won plenty of headlines here in the UK and at first glance they seem an unlikely pair. But their coming together to see Amazon sell Morrisons’ fresh and frozen goods reflects both the soaring ambition of Amazon and the complex and high-stakes battle to win in online grocery deliveries. It’s also another example of the way that changing markets are throwing together odd bedfellows.

Morrisons is seen here as a rather old-fashioned supermarket with roots deeply buried in the north of England and going back to the century before last. It is only our fourth largest supermarket with less than half the share of the UK’s leader Tesco and also lagging behind Sainsbury’s and the Wal-Mart-owned Asda.

And what of its new partner? Brits tend to be divided on Amazon with many of us adoring its convenience and ease of use while the other half focus on its dubious ethics – read responses to the left-leaning Guardian newspaper’s report on Amazon-Morrisons for a flavour of the latter half’s argument and vitriol.

The interesting colour here is that Morrisons recently made a belated strategic attempt to move into online sales via a relationship with Ocado, an online grocery specialist that started out focusing on selling goods from posh supermarket Waitrose. Waitrose, part of the John Lewis group that also has a network of upscale department stores, is often mocked for the fact that its ‘Essentials’ range includes items such as artichoke hearts and cardamom and black pepper body wash..

But Waitrose has started selling goods direct to customers online, both delivering or for collection, thereby casting doubts on the future of the Ocado-Waitrose axis. Ocado for its part is branching out in the range of items it sells to avoid a symbiotic dependence on the Ocado relationship.

So this is an interesting step in the waters for Amazon (or perhaps a second step as the company sells some everyday items via Prime in some areas of the UK already). For Morrisons this represents, as it said in a statement a “low risk” change and for Ocado, a company long doubted by some retail analysts, it’s probably not great news.

But Amazon and Morrisons are far from being the only odd couples getting into bed with each other. Look, for example, at IBM which is enjoying a fruitful alliance with Apple. The pair are working to get business applications and onto iPhones and iPads, optimise cloud services for Apple hardware and make Apple a more easily manageable solution for enterprises.

In fact, IBM is emblematic of the way that the fast-changing business landscape is nudging companies to make pacts with seemingly unlikely peers. Big Blue also works closely with Twitter, for example, so that tweets can be mined to inform business decisions.

As the very nature of business changes towards the social enterprise, as the internet becomes an even bigger part of our lives and as technology deployment also changes to be mobile-centric and cloud-friendly we will see more of this. You can imagine Facebook At Work being delivered by a blue-chip IT services company that reassures large enterprises, for example, as young and old companies lean on each other for support.

In periods of flux it’s not uncommon for companies from different ends of the spectrum to combine. It’s not always successful of course: think of IBM’s attempt to join IT with telecommunications by buying Rolm or of the disastrous coming together to of Time Warner and AOL to conquer media and internet convergence. And some deals will get approved while others get blocked: regulators allowed broadcaster BSkyB to buy Easynet to make it a broadband player but stopped its attempt to buy Manchester United.

As this period of flux continues, stand by for more examples of strange coupling.

 

Related reading:

Google, Amazon, Facebook, Apple: who will be the big GAFA?
Can Jet.com out-Amazon Amazon?
AWS’s Werner Vogels builds the Everything Platform

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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