Ocado has announced the temporary suspension of Morrisons.com capacity at its new customer fulfilment centre (CFC) in Erith, south-east London.
Following a fire at its CFC in Andover in February, Ocado has been on the lookout for additional capacity within its existing network, as well as investigating the longer-term steps to replace the lost capacity.
Morrisons has agreed to temporarily suspend using Morrisons.com's share of the capacity at Erith in a move that Ocado said would give it additional capacity to grow and thereby mitigate the impact of the Andover fire.
At the same time the new agreement will enable Morrison.com to continue to grow by fulfilling orders from Morrisons stores using Ocado's store pick solution, the two sides said. Morrisons.com currently accounts for over 10,000 orders per week at Erith and has the right to 30 per cent of Erith’s future order capacity.
Morrisons.com will return to using its share of capacity in Erith in February 2021. During the period of suspension, Morrisons will not incur any of the costs associated with the use of the facility and will pay lower store pick fees.
The two retailers have also agreed to a mutual relaxation of certain exclusivity provisions, bringing Morrisons more in line with the terms agreed with other international Ocado Solutions clients.
Tim Steiner, chief executive of Ocado, said: 'Morrisons is a valued partner of Ocado and we are glad that we have been able to come to an equitable and pragmatic agreement that is in the interests of both parties. We look forward to welcoming Morrisons back to Erith in February 2021'.
Morrisons’ chief executive David Potts added: 'We are pleased to be helping our partner in times of need after the recent fire. We will keep growing Morrisons.com for our customers and save some cost, returning to the Erith CFC when it is more mature.
'Our new agreement allows us to have more than one digital partner, and opens the way for significant potential opportunities and partnerships in this important growth area for Morrisons.'
