Morrisons, which will launch home delivery service in the new year in a venture with Ocado, is understood to have picked Birmingham as its first location, according to The Daily Telegraph.
It is the closest large city to Ocado's warehouse in Dordon, which Morrisons bought for the service's launch.
A final decision, however, has not yet been taken, the publication noted.
The UK's fourth-largest grocer, which has lagged its rivals in introducing an online service, expects to launch into the fast-growing channel in January.
Morrisons supermarket confirms a £170m 25-year tie-up with Ocado in May of this year.
Ocado Shares have surged 450% since the agreement.