Morrisons "wasted" £27m developing online delivery - before striking deal with Ocado

Morrisons to launch new service with Ocado by the new year

Supermarket chain Morrisons spent £27m developing its own online delivery system - before lashing out £170m in a deal with Ocado.

The figures were revealed in the company's half-year results in which it saw pre-tax profits fall from £440m to £344m in the six months to the end of July, which the company partly attributed to a lack of an online offering.

However, the supermarket chain - the fourth biggest in the UK - says that it will launch its online grocery service by January 2014.

"We've been working at pace on our online offer; the final pillar of our strategy. Morrisons.com will be making home deliveries of our great fresh food by the end of January 2014, supported through our long term service agreement with Ocado," said Morrisons CEO Dalton Philips.

The company also added that its IT systems upgrade programme was "progressing well - providing the foundation for further cost savings in 2014/15".

The IT systems upgrade follows years in which the supermarket preferred to follow manual processes. Indeed, when Morrisons acquired Safeway in 2004, many of the computer systems that Safeway ran were discarded in favour of manual supply chain management and other processes.