Is e-commerce in food a feasible business model? The answer is yes, according to British Ocado, a pure player that is much more than just a webshop...
Low prices, innovative technology
Ocado, founded in 2000 as an online supermarket, reached a turnover of 1.5 billion pound in 2017 and bills a double-digit growth every quarter. The company is hosting a very impressive web shop, selling 50,000 references at low prices and low delivery costs for an average order of almost 120 euro. Part of the product range is delivered by supermarket chain Waitrose and a (small) part also by Carrefour, to serve the sizeable French population in the UK. Ocado reaches about 75 % of the British population, and this in a market where online transactions make up over 7 % of the share.
Nevertheless, the selling of food online is far from the only source of income: the company grew from a web shop into a leading technology company. Thorough automatisation and a unique user experience are some of the concept's biggest assets, as demonstrated by commercial director Marie-Axelle Loustalot-Forest at the RetailDetail Food Congress. From the start, Ocado was forced to develop its own software and hardware solutions, since no one else was doing it. The e-tailer is now making this innovative technology available to its colleagues – a bit like what Amazon is doing with its Web Services department. After all, without innovative technology, it would be impossible gain profit from e-commerce in an industry with very thin margins.
New generation of robots
To that end, Ocado Solutions has been working alongside Morrison's in the United Kingdom, Casino in France, Sobeys in Canada, ICA in Sweden and Kroger in the United States. These retailers are using Ocado's tech solutions, such as the data centres, the algorhythms to calculate the most efficient delivery routes, the user-friendly app interface and especially the fully automated distribution centres where packaged goods are now being processed entirely by robots.
For fresh products, human interference is still necessary, but the company is working on a new generation of robots that are able to treat these products 'gently', eliminating the need for human manual labour. The video below makes for an impressive example of such an automated distribution centre. But it doesn't end there: Ocado is now also working on the development of driverless delivery vans.