Ocado/Morrisons
And it's not even April Fool's day. Yes, Ocado, a company I love and use because I know they can't make any money out of me and yet provide a good service, are going to sell spare capacity to Morrisons, a shopping experience that you just won't run back to who think people need their amazing product at des res in the Home Counties. Hmm...
In the middle, Waitrose. A store whose brand is such that house prices rise when one opens in the neighbourhood. How Waitrose react will be critical. Ocado seem to have come up with a good plan whereby they have in effect sold their distribution centre that they had no ability to use.
This probably screws Waitrose who have a no compete clause, but by selling the business Ocado will think they have managed around this. The devil will be in whether Waitrose can find a way to get at Ocadao through their delivery management agreement with Morrisons.
Clearly the market thinks Ocado have pulled it off as the share price is up 30% this morning. Indeed, it is a company saver as they had invested in a white elephant that they have managed to sell. However, long term their relationship with Waitrose will end and they still never make any money and lose on every delivery. it's a real dotcom business model, sometimes like Amazon they work in the end of course...


