Profit margins tend to be higher on fresh food

Morrisons online offering faces fresh challenges - and some old ones too 

Profit margins tend to be higher on fresh food and the frequency of orders might be greater than the industry norm

Morrisons will begin an online delivery service in Warwickshire from January 2014. Photograph: Gary Calton

Here - finally - comes Morrisons ' online offer. Powered by Ocado, it's an Ocado-style service but with a few extras, such as encouragement on the doorstep to sniff your strawberries before deciding whether to accept them .

Morrisons, it seems, wants to be known as the delivery service of choice for customers who want their fresh produce actually to be fresh. This is a sensible place for the chain to make its pitch: profit margins tend to be higher on fresh food and the frequency of orders might be greater than the industry norm.

Quite how the grading of fruit and vegetables by quality fits into the mix is a mystery, however. If even Morrisons' own staff don't deem a tomato to be excellent, why should the shopper be tempted in the first place? And if every item is classed as superb, the grades are nonsense. Apparently the system is popular in the US at Fresh Direct, the business in which Morrisons invested. We shall see.

Of more concern to Morrisons' investors is the potential profits. On that score, the group merely repeated its confidence that there will be positive earnings before interest and tax in the fourth year of operation. It's a long haul in other words, as it is for the entire supermarket industry at low delivery charges that look guaranteed to put downward pressure on profit margins.

Source: The Guardian (http://goo.gl/QPV1qa)