- In a conference call this week, Ocado chief Timothy Steiner reiterated the British e-commerce company’s desire to expand internationally, according to Supermarket News.
- Ocado seems to be particularly interested in partnering with a U.S. supermarket. Reports have linked the company to Publix, though this has not been officially confirmed.
- Ocado originally set its international expansion for late 2015. After that plan didn’t materialize, the company says it’s not committing to a specific date this time around.
In the United Kingdom, online grocery’s share of the industry is more than twice that of the U.S. It’s a big fast-growing market, and Ocado is its leading provider.
Ocado knows e-commerce. In its sixteen years in business, it has developed sophisticated software and delivery systems with top-notch capabilities in offering fresh products. Some industry observers say it’s even ahead of Amazon, which has its own sky-high ambitions in grocery.
Ocado operates both as an online retailer and as an e-commerce partner for supermarkets like Morrison’s, Britain’s fourth-largest grocer. It’s spent a lot of money to become top dog in the online grocery sphere, but increasing margin pressure at home means it’s still not seeing the returns it would like. To really grow, Ocado needs to look abroad, and the U.S. is a prime target.
Partnering with a large American supermarket would be a smart way to gain a foothold. Aside from its e-commerce experience, Ocado's Smart Platform program, which it licenses to retailers, offers an enticing proposition that’s fundamentally different from Amazon, Instacart and others. Its software optimizes retail operations from the warehouse to the delivery trucks, and delivers through multiple channels, including couriers, parcel services, store vehicles and in-store pickup.
Given how eager U.S. retailers are to ramp up their e-commerce capabilities, the deal could be a win-win.
However, moving across the pond won’t relieve Ocado of the many challenges it faces. The American grocery landscape is also quite crowded, and despite the many opportunities in online retail, traditional retailers are responding quickly. There’s also the threat of Amazon, which may not be as well-versed in online grocery as Ocado, but has the resources to evolve quickly. The Seattle e-tailer has already moved into the UK market, and recently elbowed in on Ocado’s deal with Morrison’s.
With online grocery in the U.S. poised to hit $100 billion by 2025, the upside for Ocado is huge.