Ocado

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Ocado Group plc
Public limited company
Traded asLSEOCDO
IndustryInternet retail
FoundedApril 2000; 19 years ago (2000-04)[1]
FounderJonathan Faiman
Jason Gissing
Tim Steiner
Headquarters,
Area served
England and Wales
Key people
Stuart Rose, Chairman
Tim Steiner, CEO
ServicesGroceries, consumer goods
Revenue£1,598.8 million (2018)[2]
£(31.9) million (2018)[2]
£(44.9) million (2018)[2]
Websitewww.ocado.com

Ocado is a British online supermarket[3] that describes itself as 'the world's largest dedicated online grocery retailer'.[4] In contrast to its main competitors, the company has no chain of stores and does all home deliveries from its warehouses. The company was floated on the London Stock Exchange on 21 July 2010, and is a member of the FTSE 100 Index.

History[edit]

An Ocado van parked on a busy road in Central London

Ocado was founded in April 2000 by Jonathan Faiman, Jason Gissing and Tim Steiner, former merchant bankers with Goldman Sachs. Ocado was launched in January 2000 as a concept and started trading as a business in partnership with Waitrose in January 2002. When the company first started, Faiman, Gissing and Steiner ran every part of the business themselves.[5]

In September 2006, Michael Grade became non-executive chairman of Ocado, shortly after Goldman Sachs were appointed as financial advisers, fuelling speculation which had already started about a listing for the company.[6] In November 2008, the John Lewis Partnership transferred its shareholding of 29% into its staff pension fund.[7] In May 2010 the John Lewis Partnership entered into a 10-year branding and supply agreement with Ocado.[8] In February 2011, the John Lewis pension fund sold off its entire Ocado shareholding.[9]

On 13 July 2009, Ocado released its first app for the iPhone. The app, called 'Ocado on the Go', allows users to do their grocery shopping without the need of a PC.[10] On 19 April 2010, the company extended the app to Android devices. The Android app has a number of features that the iPhone app does not have, including the ability to control the app using only the voice.[11] In 2015, Ocado launched the first grocery app for the Apple Watch.[12]

In July 2010, following considerable speculation, Ocado undertook a stock market Initial public offering.[13]

In 2015 Ocado launched the Ocado Smart Platform, its own software for operating retail businesses online.[14]

In August 2017, Ocado launched an app for Amazon’s Alexa voice assistant, that will allow users to add products to an existing Ocado order or basket via voice command. The company states it is the first UK supermarket to launch an app for Alexa.[15][16]

In November 2017, Ocado's shares rose by 20% following the fulfillment of an Ocado Smart Platform deal with the French Casino Group.[17]

In January 2018, Ocado completed negotiations for an Ocado Smart Platform deal with Canada's second largest supermarket chain Sobeys, owned by Empire Company. Michael Medline, CEO of Empire and Sobeys, said its e-commerce (robotics system for home deliveries) business would start in approximately two years.[18][19][20]

In May 2018 Ocado signed an Ocado Smart Platform deal with Kroger, the US retail company, to build up to 20 Customer Fulfillment Centres (CFCs) using Ocado's automated technologies.[21] As of November 2019, five locations have been identified for the new CFCs, and two are under construction.[22]

In the early morning of 5 February 2019, Ocado's customer fulfilment centre (CFC) in Andover, Hampshire, which handles 10 per cent of its fulfilments, caught fire. The fire continued to burn the following day, engaging more than 25 fire engines and 300 firefighters from multiple fire services, as far as Kent. A 500-metre exclusion zone was set up and residents as far as 1.6 km away were to be evacuated as a precaution. The fire burned for more than 3 days, with the roof collapsing in the process[23][24][25][26]

On 27 February 2019, Ocado and Marks and Spencer announced a Joint Venture, whereby M&S acquired a 50% share in Ocado's UK retail business.[27]

On 4 June 2019, Computerworld UK reported Ocado’s intent to use robotic packers to handle all 55,000 products it stocks, utilizing technology developed in collaboration with SOMA, the Soft Manipulation consortium. Ocado will initially use suction cup-based robots to handle durable objects, but plans to deploy “soft hands” robotic technology to handle delicate products such as fresh fruits and vegetables.[28]

British supermarkets[edit]

Ocado's warehouse in Hatfield

Ocado's products include own brand groceries from the Waitrose supermarket chain as well as their own Ocado brand, but also a selection of name brand groceries and other items, including flowers, toys and magazines.[29] This partnership will end in September 2020 when Ocado's joint venture with Marks and Spencer begins, at which point Ocado will sell M&S products alongside its own and cease to sell Waitrose products.[30]

Since January 2014, Ocado have provided the website, warehousing and delivery services for one of their main grocery rivals Morrisons supermarkets, allowing them to operate online using Ocado's network of depots to deliver Morrisons groceries to online customers.[31] The fulfilment of Morrisons.com grocery website customer orders comes from Ocado’s Dordon Customer Fulfilment Centre (CFC) in the Midlands, with deliveries brought to the customer's doorstep via Morrisons liveried fleet. Morrisons made an initial capital payment of up to £170m to Ocado to acquire the Dordon site and associated mechanical handling equipment, as well as a licence and integration fee. A further £46m was invested to expand Dordon in order to accommodate Morrisons range, integrate with Morrisons systems and establish a network of delivery spokes. On an annual basis, Morrisons pay service costs and a contribution to research and development expenditure.[32]

Technology[edit]

Robots move on the grid inside an Ocado warehouse
Robots inside an Ocado warehouse
logo for Ocado Technology
Ocado Technology logo

Ocado Technology, a division of Ocado Group, designs most of Ocado's technology in-house, including but not limited to: website and apps; automated warehouses and robots; Machine Learning-based fraud detection and customer service systems; forecasting and routing systems.[33][34] They describe themselves as specialists in: automation and robotics; big data and the cloud; web and app development; algorithms and smart optimisation; and discrete event-simulation.[35]

Ocado's warehouses are built with a giant 3D grid structure inside, within which groceries are stored in crates. On top, robots (over 1,000 per warehouse) coordinate in swarm-like behaviour to collect and move the crates. The robots bring the crates up from the grid into their interior and take them to pickers so the groceries inside the crate can be packed into orders. They then move the crate back into the grid. The robots can work together to 'dig' for the crates, moving crates out of the way to collect one buried lower in a stack. The movement of the robots and the storage location of the crates is managed and optimised by a central 'control system' using Artificial Intelligence. In this way, Ocado can pick a 50 item order in minutes.[36]

These 'hive' style warehouses are located in Andover and Erith. The Erith site is 36 acres, capable of processing 220,000 orders a week, with up to 3,500 robots running on its grid. Ocado's older warehouses, located in Hatfield and Dordon, are based on a complex conveyor system and use Artificial Intelligence to plan and optimise picking sequence, product location, and crate routing.[37]

Ocado Technology was involved in two EU-funded Horizon 2020 robotics research projects: SecondHands[38] and SOMA[39] and continues to experiment with robotics for automating picking and packing of grocery orders.[40]

Ocado has six technology development centres in Europe: Hatfield and London in the UK; Kraków and Wroclaw in Poland; Sofia in Bulgaria; Barcelona in Spain.[41]

In 2014, volunteers from Ocado Technology founded Code for Life, an initiative to provide schools with free resources for teaching coding.[42]

Ocado Smart Platform[edit]

The Ocado Smart Platform is Ocado's software for operating retail businesses online. Clients include the following supermarket chains: Morrisons (UK); ICA (Sweden); Group Casino (France); Sobeys (Canada); Kroger (USA) and Bon Preu (Spain).[43]

An Ocado electric van, parked in London
An Ocado van with the bonnet up at a London depot

Name[edit]

Jez Frampton, CEO of Interbrand and non-executive director of Ocado, claims the name "Ocado" is "a made-up word, intended to evoke fresh fruit". Neil Taylor, an Interbrand consultant, stated that the name was a variant on the avocado fruit.[44]

See also[edit]

References[edit]

  1. ^ "Ocado History". Ocado. 2011. Retrieved 2 February 2014.
  2. ^ a b c "Annual Report 2018" (PDF). Ocado. Retrieved 10 March 2019.
  3. ^ Premack, Rachel. "The UK online grocer that's helping Kroger battle Amazon blew up the biggest misconception about delivering groceries to Americans". Business Insider. Retrieved 9 July 2019.
  4. ^ "Ocado Group". www.ocadogroup.com. Retrieved 9 July 2019.
  5. ^ "Ocado Factsheet". Just-food, Aroq Ltd. 2008. Retrieved 28 October 2008.
  6. ^ "Ocado prepares for 2006 flotation". The Guardian. 24 December 2004. Retrieved 10 April 2016.
  7. ^ "John Lewis nets £220m from selling Ocado stake". The Telegraph. 12 February 2011. Retrieved 7 February 2019.
  8. ^ "Waitrose and Ocado Announce New 10 Year Branding and Sourcing Deal". John Lewis Partnership. Archived from the original on 16 July 2011.
  9. ^ Wood, Zoe; Kollewe, Julia (12 February 2011). "Ocado share sell-off delivers £152m to John Lewis pension fund". The Guardian. London. p. 45.
  10. ^ "devoted to your shopping". Ocado. Retrieved 21 July 2010.
  11. ^ "Ocado Android app allows mobile grocery shopping using voice". Internet Retailing. 19 April 2010. Retrieved 21 July 2010.
  12. ^ Sabharwal, Veebs. "Ocado Technology launches world's first grocery shopping app for Apple Watch". Retail Gazette. Retrieved 16 August 2016.
  13. ^ "Ocado's IPO Buyers Include Fidelity, Other Early Investors". Wall Street Journal. 29 July 2010. Retrieved 10 April 2016.
  14. ^ "Ocado Smart Platform Explained - Ocado Group plc Annual Report 2014". results14.ocadogroup.com. Retrieved 8 July 2019.
  15. ^ Lomas, Natasha. "Ocado launches Alexa app for grocery shopping by voice". Retrieved 25 October 2019.
  16. ^ "How Ocado is beating Amazon and plans to take over the world". Sifted. Retrieved 6 June 2019.
  17. ^ "Ocado shares soar after French deal". BBC News. 28 November 2017. Retrieved 28 November 2017.
  18. ^ "Sobeys to expand online grocery business by tying up with Britain's ecommerce giant Ocado". Financial Post. 24 June 2014. Retrieved 27 September 2018.
  19. ^ "Sobeys predicts e-commerce dominance with Ocado". Supermarket News. 14 March 2018. Retrieved 27 September 2018.
  20. ^ "Loblaw plans to 'blanket' Canada with e-commerce options by the end of 2018". Globe and Mail. 3 May 2014. Retrieved 27 September 2018.
  21. ^ "Ocado shares rocket 44% on US tech deal". BBC News. 17 May 2018. Retrieved 19 May 2018.
  22. ^ "Kroger is Building an Enduring Advantage". Progressive Grocer. Retrieved 15 November 2019.
  23. ^ Gibbons, Katie (9 February 2019). "Ocado robots at Andover warehouse 'hampered' firefighters". The Times. ISSN 0140-0460. Retrieved 26 March 2019.
  24. ^ "Ocado warehouse fire finally out". 8 February 2019. Retrieved 26 March 2019.
  25. ^ Butler, Sarah; Busby, Mattha (6 February 2019). "Ocado warehouse fire: Homes evacuated amid 'explosion risk'". BBC News.
  26. ^ "Houses and industrial estate evacuated due to Ocado warehouse fire". The Guardian. 6 February 2019.
  27. ^ "BRINGING THE BEST TOGETHER: TRANSFORMING UK ONLINE GROCERY SHOPPING M&S AND OCADO ANNOUNCE NEW JOINT VENTURE (Press release)". corporate.marksandspencer.com. Retrieved 25 October 2019.
  28. ^ Macaulay, Tom (4 June 2019). "Ocado plans to pack up fragile fruit and vegetables with robotic 'soft hands' that adapt to objects and their surroundings". ComputerworldUK. Retrieved 25 October 2019.
  29. ^ Davey, James (7 November 2008). "Update 2-John Lewis moves Ocado stake to pension fund". Reuters. Retrieved 21 July 2010.
  30. ^ "M&S update to customers | Ocado". www.ocado.com. Retrieved 8 July 2019.
  31. ^ Moulds, Josephine (17 May 2013). "Ocado tie-up to help Morrisons start selling groceries online". The Guardian. ISSN 0261-3077. Retrieved 8 July 2019.
  32. ^ "Morrisons Announce Deal With Ocado". FMC News.
  33. ^ "Ocado delivers with in-house software development". ComputerWeekly.com. Retrieved 8 July 2019.
  34. ^ High, Peter. "Lessons From The Man Who Is Revolutionizing The Grocery Business". Forbes. Retrieved 8 July 2019.
  35. ^ "About". Ocado Technology. Retrieved 8 July 2019.
  36. ^ Vincent, James (8 May 2018). "Welcome to the automated warehouse of the future". The Verge. Retrieved 8 July 2019.
  37. ^ Excell, Jon (13 March 2017). "Ocado Engineering reshapes retail with robotics and automation". The Engineer. Retrieved 9 July 2019.
  38. ^ "SecondHands – A Robot Assistant For Industrial Maintenance Task". secondhands.eu. Retrieved 8 July 2019.
  39. ^ "SOMA SOFT MANIPULATION - SoMa Soft Manipulation". soma-project.eu. Retrieved 8 July 2019.
  40. ^ "How Ocado and SOMA Consortium Partners made major breakthroughs in robotic manipulation". Ocado Technology. Retrieved 8 July 2019.
  41. ^ "About". Ocado Technology. Retrieved 9 July 2019.
  42. ^ "Ocado Technology readies primary school teachers with code initiative". Computer Weekly. Retrieved 6 September 2016.
  43. ^ "Morrisons". Ocado Solutions. 15 September 2017. Retrieved 8 July 2019.
  44. ^ Mark Kleinman on marketing and the City: Can Ocado deliver more? Brand Republic, 22 September 2009

External links[edit]