Ocado is a British online supermarket which is founded in 2000. It is one of the top 10 most popular online stores in the United Kingdom in 2018 (Statista, 2019).
Ocado Retail Ltd. is a joint venture invested by Marks & Spencer Group and Ocado Group, which is responsible for ocado.com and other two retail brands: the online pet shop Fetch and the new one-hour grocery service Ocado Zoom. Ocado is the world’s largest online supermarket, has 250,000 active customers, and a 15% share in the UK online sundries market. Ocado Zoom is a new one-hour general store service. Customers can receive a variety of grocery items from the store within 60 minutes, or on the same day. Fetch is the fastest growing pet care destination website, offering a range of specialized pet foods and components for discriminating ‘Pet Parents’.
The sales of it reached £ 1.5 billion in 2017, with double-digit quarterly growth for each year. The company has a very impressive online supermarket, selling 50,000 references at low prices and low delivery costs, placing orders on average less than 120 euros. Chain store Waitrose provides some of the product range, and some are supplied by Carrefour, serving the vast French population of England. Ocado serves about 75% of the UK population, but online transactions account for over 7% of the market.
The most striking advantage of Ocado is the automated warehouse, which is using robots to make the process of online grocery shopping faster. The warehouse is called ‘the hive,’ ‘the grid’ or ‘the machine,’ which is a massive structure on the outskirts of Andover. The robots in the warehouse are cheaper and more efficient than humans, which wheel about moving groceries for 24 hours. Ocado creates hive-grid-machine and sells its technology to other grocery chains. When it goes into full operation, the company will handle 3.5 million products and accept about 65,000 orders per week in Ocado’s Andover business, the most advanced business to date. It’s a perfect example of the wave of automation, slowly hitting countries around the world. The role played by Ocado robots is best explained by simple verbs— ‘lifting,’ ‘moving,’ ‘sorting’ – which means they exist in a range of industries in various ways. Ocado Technology is putting the world’s retailers online using the cloud, robotics, AI, and IoT (Stefan Van Rompaey, 2018). In other words, 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.
Ocado Solutions have partnered with Morrison’s in the United Kingdom, Casino in France, Sobeys in Canada, ICA in Sweden, and Kroger in the United States. These retailers use Ocado’s technical solutions to calculate the most efficient distribution routes, user-friendly application interfaces, especially data centers, algorithms, etc., especially fully automated distribution centers.
Human labor is still necessary for terms of some fresh products, such as bananas, grapes, and so on. However, to solve this problem, the company is working on a new generation of robots that can treat products ‘gently.’ There is a video showing an impressive example of an automated distribution center. But Ocado doesn’t stop here. It was also working on the development of driverless delivery vans, which will play a significant role in the more efficient delivery of Ocado.
Recently, the coronavirus spreads in the British. To avoid being infected, people are more willing to make the order online and use the delivery service. Therefore, to meet the exceptionally high demand, the online grocery stalwart Ocado has advised customers to place their orders early. If the situation is getting worse in the next days, the further step of Ocado might be thinking about the contactless delivery services to protect both customers and employees. The delivery service without contact with human beings is meaningful for those who feel sick and stay at home for self-isolation to avoid infecting others.
Furthermore, Marks & Spencer and Ocado have confirmed a deal that will give the High Street retailer a home delivery service for the first time (BBC NEWS, 2019). Ocado will deliver M&S grocery products from September 2020 when Ocado’s deal with Waitrose expires. Ocado solves the problem of M&S that has struggled with not having an online delivery service, which means in the future, Ocado can get joint with more traditional stores on the High Street.
reference
Statista. (2019). Most popular online stores in the United Kingdom in 2018, by e-commerce net sales (in Million U.S. Dollar). Retrieved from Statista.
Stefan Van Rompaey. (2018, September 25). Ocado: a technology company disguised as an online supermarket. Retail Detail. Retrieved from https://www.retaildetail.eu/en/news/food/ocado-technology-company-disguised-online-supermarket
Tech Insider. (2018, May 9). Inside A Warehouse Where Thousands Of Robots Pack Groceries [Video file]. Retrieved from https://www.youtube.com/watch?v=4DKrcpa8Z_E
BBC NEWS. (2019, February 27). M&S and Ocado to start home delivery service next year. Retrieved fromhttps://www.bbc.co.uk/news/business-47383159
Stephanie's blog 
With the increase in the number of Internet and mobile electronics users, people’s lifestyles have also changed. Online shopping makes people’s lives easier. The technology used from the online supermarket mentioned in this article is amazing. Its use of digital technology and automation technology is world advanced. I think that in Ocado’s business model, the most useful strategy is to cooperate with local supermarkets in various countries. Ocado and the local supermarket complement each other in terms of technology and supply to achieve a win-win situation. The author also has a comprehensive understanding of the current international situation, and made an accurate analysis of the market changes brought by the coronavirus. The text and video in the article work well together, making it easier to understand. Finally, I think the author can use some analytical methods, such as swot analysis, to analyze the business model.
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Hi Stephanie, really good post thanks for sharing.
It’s interesting to learn how Ocado are developing the ‘gentle’ robots to work with fresh fruit and veg. That is something I never thought about before. I think it will be cool to see if the absolute whole process will be automated in the future, right through from growing the produce to having it delivered at your door.
Out of interest, how do you see the world of food delivery changing in the future?
Thanks,
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Hi Stephanie! Great post – when I first began reading this, I was immediately skeptical of the robots ‘replacing humans’ for these kinds of services. However, I understand now that it is an effective example of how businesses are using technology to be more sustainable and setting an example for other retail outlets to follow. As you mentioned, it is a great revenue-generating opportunity as proven by through the global partnerships Ocado has been able to make, and, crucially, suggesting that such innovation can be applied to almost any business in any industry sector (as mentioned in this article https://www.telegraph.co.uk/business/ready-and-enabled/sustainability/ocado-shift-in-business-model/). It was also interesting to see in the video that humans still have a role to play in the operation within the warehouse. Do you think the robots may in the near future not require the human assistance, and if so, do you see this as a potential issue for us workers?
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I really appreciate your post of Ocado. It is the right time to expand online supermarket service. On the one hand, the price of real estate has increased dramatically. Many companies are suffering from the high rental in high streets. On the another hand, people has already get used to digital life. Most of population in the country are willing to purchase fresh food online. Recently, I found an interesting survey about how British people rank the supermarket in terms of service, product quality and location. Although Ocado only operate the business online, the ranking of it is even higher than Sainsbury’s and Tesco. Ocado corporate with other e-commerce such as Look Fantastics. Customers can find a promotion card of Ocado in every delivery from Look Fantastics, and this help Ocado to increase market penetration rate and brand awareness, because most customers in the Look Fantastics are female, who are the frequent buyers of sundries. What impress me most is the Fetch. People have very limited choice in store. This online shop specified in the Pets’ food is full of potential. In UK, the annual expenditure on pets has increased since 2011(Statista, 2018). Another advantage of Fetch is that the shared delivery system with Ocado. Customers won’t pay for delivery cost the once again.
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Hi Stephanie
Your poster is very well done. Even though Morrison’s in the United Kingdom, Casino in France, Sobeys in Canada, ICA in Sweden, and Kroger in the United States all have shopping groceries online, I learned from your article that these retailers use Ocado’s technical solutions to calculate the most efficient distribution routes, user-friendly application interfaces, especially data centres, algorithms, etc., especially fully automated distribution centres. Creating a new generation of robots that can treat products ‘gently’ is sounds very amazing, and I really hope this robot can be born in successfully. In addition, you can also use other business models to analysis Ocado and do more comparison with other competitors.
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Hi Stephanie, thanks for your post.
Recently I read an interesting article about the supermarket ranking of 2019. Please kindly check the link: https://www.which.co.uk/news/2019/02/best-and-worst-supermarkets-for-2019/. The article suggests that Ocado wins the battle as the best home delivery supermarket, followed by frozen-food specialist Iceland. Most respondents gave Ocado positive reviews on delivery slots, variety of food, ease of finding products. Besides, own-label foods are also in high quality.
Traditional supermarket giants Tesco and Sainsbury’s also expand their business to home delivery. It is the right time to further develop the online supermarket service. On the one hand, the price of real estate has increased dramatically. Many companies are struggling with the expensive rental in the city centre. On the another hand, people has already get used to digital life. Most of population in Britain are willing to purchase fresh food online. I am quite impressed with automatic wardrobe. I consider it as one of the most successful factors contributing to the excellent delivery service. The application of robots help reduce labor cost and increase the efficiency.
What interest me most is the Fetch, the Pets’ food shop. According to my personal experience, I have very limited choice over the pets’ food when they shop offline. Fetch provide customers with a wide range of pets’ food. Another advantage of Fetch is the shared delivery system with Ocado. Customers won’t pay for delivery cost the once again.
I also want to share the promotion strategy of Ocado. Ocado cooperate with Look Fantastics. For example, customers can find an Ocado’s promotion card in every delivery from Look Fantastics. This helps Ocado to increase market penetration rate and brand awareness, because most customers on the Look Fantastics are female, who are the frequent buyers of sundries.
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Hi Stephanie,
Thank you for enlightening us about Ocado and its operations. Many times, people focus too much on Apple, Tesla, Google, and other successful U.S. multinationals, forgetting that equally impressive ventures, which are deserving of our attention, exist in other countries too. When you mention that Ocado uses robots in its warehouses to hasten the online grocery shopping process, I cannot help but wonder how possible replication of the strategy across industries will impact employment soon. I have heard many people argue that automation will never succeed without human assistance, but I still think that a time will come when robots will require minimum to no external support. Therefore, with various predictions indicating that the world population will continue to grow at a faster rate, businesses should reconsider the highly favored move to implement intensified automation drastically. It is the only way the world will avoid a situation where high rates of unemployment prevail, forcing people to languish in hunger and poverty.
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Hi Stephanie, thanks for your post.
With the popularization of the Internet, the deepening of big data, and the development of AI and other Internet technologies, online shopping has developed rapidly with the support of these technologies. Ocado, the world’s largest dedicated online grocery retailer, also relies on these technologies. Behind the complex technical support, it provides a large number of jobs. People can obtain the relevant programming language through the specialized organization and realize the employment. Offline delivery also requires a large number of professional drivers. Unemployment and employment are dynamic processes. The rise of new industries and technologies has not only brought people a better quality of life but also solved some social problems.
In addition, the online shopping system is becoming more and more mature, will it have an impact on offline physical stores? Will it reduce the turnover of physical stores? At present, online shopping is to show still pictures, so with the technical support in the future, can it be improved into online VR shopping?
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