Analysis of Ocado

The grocery landscape worldwide is changing “for good”

Over the past year, nearly one in five British households bought groceries online (5.7 million shoppers). Previously, it was barely an option as brits were so used to the supermarket aisle dash.

2020 was a crazy year for everyone, including Ocado, who saw it’s value triple at one point.

But what has caused this meteoric rise?

2020 Success

Evolving eCommerce

Despite the recent slowdown, online sales now account for 14% of total grocery sales; versus around 7% pre-pandemic.

Right place, right time

Ocado found itself in the right place at the right time with the perfect combination of online capability, and logistics, that were needed to pull away from other grocery retailers.

Market leaders

Ocado topped grocery giant Tesco as the ‘most valuable retailer’ (despite selling 1.7% of the UK’s groceries). Their value soared to £21.66bn.

Sales surge

In 2020, analysts have predicted that Ocado will reveal a 33.5% jump in group revenues – to £2.35 billion, with earnings of almost £125 million.

Customers placed around 360,000 orders a week on average as pubs, restaurant and cafes remained closed.

Technology triumph

A forward-thinking business that utilises the latest tech to drive efficiency, reaping the rewards of AI.

Customer Fulfilment Centres (CFC’s): Operate using a sophisticated system of ‘hives’ and rapid robot ‘pickers’. This means that they can hold large quantities of stock in a small space.

Automation: Highly-automated process also means orders are fulfilled faster and at a lower cost. The company uses algorithms to track food shelf-life, thereby cutting waste.

Efficiency: Driver-routing technology cuts delivery time by calculating the most efficient routes, enabling the retailer to deliver 95 per cent of its orders on time.

The future of Ocado

Speed to consumer

The national release of Ocado Zoom. Zoom offers a same-day delivery service as well as within-the-hour delivery to customers within a certain distance of its dark store micro-fulfilment centre.

Room for growth

Ocado’s infrastructure allows exponential growth to their partners. As their e-commerce demand rises, so will Ocado’s fulfilment centres, using the newest technology to make it simple.

Capacity increase

With the recent opening of a CFC in Bristol and plans for two other CFCs to be opened by the end of the year. Purfleet and Andover sites will take Ocado’s capacity top 40%.

Fresh competition

Amazon Fresh

  • Launched much-anticipated grocery delivery in 2016 (UK).
  • Added to expanding members perk list.
  • Can offer a one-hour delivery slot.
  • Forecast growth of 76.2% to £19.5bn in 2020 due to Covid-19.

Deliveroo

  • Already has 50,00 riders in the UK.
  • Available for 2/3 UK population.
  • Established consumer trust.
  • Delivery within as little as 20 minutes.
  • Potential to be a major player in grocery deliveries.

Getir

  • Turkish delivery service comes to London this year (2021).
  • 5 million monthly orders in Turkey, the system is already set up and in place for UK success.
  • 10 minute delivery time.

Where will Ocado be in 5 years time?

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