Ocado unconcerned by Amazon’s online food store

Online retail giant Amazon has announced it will start selling groceries online – just  weeks before online grocer Ocado floats on the stock exchange.

Amazon said it will carry more than 22,000 lines from companies such as Kraft, Pepsi and Procter & Gamble.

Greg Lawless, an analyst at Collins Stewart, shrugged off concerns that Amazon's announcement would affect take up of Ocado's initial public offering, which values the company at around £1.1bn. "Clearly it's not helpful," he said. "But from an initial view it appears more like Costco than Ocado." Ocado has an exclusive deal to sell the groceries of high-end supermarket Waitrose.

The Financial Times says people close to Ocado indicated they were not overly worried because Amazon would not be able to offer a weekly single delivery. Although groceries purchased from Amazon itself can be delivered all at once, those purchased from third parties on the website will be delivered separately.

But Ocado should keep an eye on developments. M&S uses Amazon to sell online, although it is yet to offer the full range of its food. If and when it does, it will be a direct competitor for Ocado's upmarket customers.

Read a full report at the Financial Times (registration required). ·