1) We are talking about Amazon and PrimeNow, not YET a full scale roll out of the Fresh model (which has its own logistics set up).
2) Apart from hiring the right talent, one big pain point Amazon had to overcome in the UK was establishing the supplier relationships in the fresh categories – while keeping costs manageable. The Morrisons deal solves this problem very elegantly.
3) The Morrisons tie up means that Amazon can build out its range rapidly to serve their most loyal prime customers. Then the flywheel effect will kick in. The bigger the range gets, the higher the volume and frequency of customers doing their grocery shopping on Amazon. The more customers are on the site, the stronger the incentive for other grocery manufacturers to sell on Amazon too. And the 3P marketplace model means unrivalled range depth from independent sellers and brands. And the deeper the range, the bigger the threat to Tesco, Sainsbury, Asda, Ocado etc will be.
4) From a customer perspective the importance of prime cannot be overstated (shoppers will gain access to a Netflix, Spotify, Dropbox etc type offering all for the price of a delivery pass) – no other grocer can rival this.
5) Only Morrisons with their tiny online business would have gone for such a deal. The others would only have cannibalised their own online businesses by partnering up with Bezos. Morrisons vertical integration model means that the retailer produces much of its fresh categories and private labels itself. As soon as the volumes pick up, Morrisons can let their production sites run longer and more efficiently to produce for Amazon as well.