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Shoppers buying more often from Ocado – robotic warehouses help it meet demand

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Shoppers are more often choosing to buy from Ocado, although the value of their orders is staying the same, according to the online grocer. It now has two robotic warehouses that it says are helping meet the growth in customer demand, with its centre in Erith, south east London, set to be the world’s largest of its kind when it reaches capacity.

Ocado, a Top50 retailer in IRUK Top500 research, said in a trading statement that revenue of £348.6m in the 13 weeks to September 2 was 11.5% up compared to the same time last year. The growth came as customers placed 283,000 orders a week, 11.4% up on last year, but as the average order value stayed the same at £106.26, from £106.25 last time.

Ocado said that its new robotic warehouses were helping it meet growth in demand, as more shoppers buy groceries online. During the summer its customer fulfilment centre in Erith opened, adding to an existing centre at Andover. 

“The new capacity from Andover and Erith, our robotic third and fourth warehouses, is helping met consumer demand for our services and drive the channel shift which is transforming grocery retailing in the UK,” said Tim Steiner, Ocado chief executive. “We are proud to have opened our Erith customer fulfilment centre this summer on time and on budget. At full capacity, this latest state-of-the-art CFC will be the largest automated warehouse for online grocery in the world.”

Last week, he said, Erith processed more than 20,000 orders just 14 weeks after opening – a figure that Andover only achieved 15 months from opening. Robots in Ocado’s warehouses come in a range of types and sizes. Smaller robots handle an automated packing process, video here while the retailer has also unveiled the prototype of its large Second Hands robot that will act as a warehouse assistant.

Steiner today said the said the two gave Ocado new opportunities to grow its own UK retail business while also underpinning operations for the third-party retailers who licence its technology to power their own ecommerce grocery businesses. The retailer currently supplies its technology to partners from UK supermarket Morrisons to US grocer Kroger

“Cado’s unique and proprietary technology, which makes these facilities work, is bringing greater value, quality and convenience to British shoppers while at the same time helping our partners redefine the shopping experience for their own customers,” he said. “We are on track to deliver a significant number of new CFCs for our Solutions partners in the coming years and as such as fulfilling our goal of changing the way the world shops.”

Commenting, Thomas Brereton, analyst at GlobalData, said: “While Ocado’s retail division continues to grow at pace (and controls c.11% of the UK online grocery market), CEO Tim Steiner is correct to describe its own retail operations as ‘showcases’ for the scalability and efficiency of Ocado’s proprietary technology; after all, the best way to entice further international partnerships is to exhibit a successful operating model in the UK. And Ocado is not slowing tech investment; a recent European patent shows that Ocado has begun design of robot-run urban farms able to grow vegetables and rear livestock, and is separately developing robotic hands capable of handling fruit packaging.

“The future appears all bright for the so-called ‘Microsoft of Retail’. Unconfirmed rumours of a potential movement into non-food (if true) would certainly provide a sharp shock across the retail world – particularly as Ocado’s exclusive agreement with Morrisons only covers ‘online grocery services’. Given Ocado’s advanced position in the retail tech race, it seems very plausible that a host of non-food retailers would be queueing round the block to sign an agreement to get rid of the headache of online fulfilment.’’

Image courtesy of Ocado

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