Ocado announces £750m online shopping deal with M&S

Keiligh Baker's picture
by Keiligh Baker

Ocado has announced the creation of an online grocery shopping joint venture with Marks & Spencer.

M&S will buy a 50% share of Ocado's retail business for £750m. The joint venture will be called Ocado and will deliver M&S products from September 2020, when Ocado's deal with Waitrose expires.

The deal is a major investment in online retail for M&S as its in-store fashion and homewares offerings continue to struggle.

M&S will fund the deal by selling £600m of shares and by cutting its dividend payout to shareholders by 40%.

Steve Rowe, M&S chief executive said: "We think we've paid a fair price. This is something that will scale our business and frankly it's the only way we could have gone online within an immediately scalable, profitable and sustainable business."

Ocado founder and chief executive Tim Steiner told the BBC: "We'll both continue to sell in the joint venture over 50,000 products to the Ocado customer as we have today."Today within the 50,000 products that we have there's about 4,500 own label Waitrose products that obviously we'll stop selling and we'll start selling more than 4,500 M&S products to our customers."

Chris Elliott, Senior Insight Analyst at Edge by Ascential, told Prolific London: “This deal with M&S will likely end the relationship with Waitrose after 20 years.

"There have been numerous rumours over the last few months that Amazon has been looking at acquiring Morrisons and it wouldn’t be far-fetched to suggest that Waitrose may now be more attractive, especially after this development.

"Amazon has already done this in the US with Whole Foods and buying Waitrose in the UK would be a better complement than Morrisons as it further consolidates its grocery offering.”