For now, Ocado is continuing to conduct test runs of the tech with its new investment partners Oxbotica and Wayve. Self-driving is an even trickier proposition mired by regulatory hurdles linked to public safety concerns. The company is already working on automating more parts of its picking process for the entire range of 55,000 goods it offers online. In addition, according to Takeoff Technologies, the system is capable of handling 3,000-4,000 online grocery orders per week per location on a two-hour service policy versus one-hour slots for Ocado, Pontikis explained.īut, the timeline for Ocado to further improve those innovations and introduce self-driving deliveries to its toolkit remains uncertain. Since those systems are meant to replace manual store-based picking and are located in the under-utilized space of existing stores, he said, the range available online to consumers is limited by the availability in the store, which can be several times lower than that offered by centralized warehouses (in excess of 50,000 SKUs versus less than 20,000 for stores). While these small-scale agreements are being tested as alternatives to manual picking for online orders, they only offer a short-term solution to a long-term problem, according to Pontikis. Meanwhile, Ahold Delhaize USA and Albertsons have struck a similar partnership with Takeoff Technologies, which also counts Woolworths in Australia as a client. Walmart, for example, has tapped technology providers Alert Innovation, Dematic and Fabric to help it add automated micro-fulfillment centers to dozens of store locations. In a sign of the competitive dynamics in the market, some retailers have opted to partner with Ocado’s rivals on their respective automation projects. Ocado said it plans to spend £700 million as expected international technology losses continue to mount and investment is ramped up. Ocado’s capital expenditure rose by roughly £100 million to £319 million during the same period. The division, however, is also causing it to burn through cash. For now, the unit represents 31% of Ocado’s total group revenue, with the lion’s share generated by its retail business. At the half-year stage, Ocado reported £383.9 million in year-over-year revenue from its combined U.K. These types of partnerships have contributed to the growth of Ocado’s solutions business. Ocado’s deal with Kroger, for instance, includes a commitment to build capacity equivalent to 20 customer fulfillment centers across the U.S., the first of which was introduced in April, and to supply in-store fulfillment to support curbside pickup. It also receives a fixed fee as a percentage of sales generated in the warehouse. That brought its total list of partners to nine, split across four continents.Īccording to a Morningstar report into Ocado’s tech licensing business, the company receives a signing-on fee, payable immediately when a new deal becomes effective. retail business to Marks & Spencer as part of its pivot to tech Spanish supermarket Alcampo struck a deal with Ocado in July. grocer Kroger in 2018 Japan’s Aeon and Australia’s Coles inked deals with Ocado in 2019, the same year it divested half of its U.K. That year, it struck a pact with Casino Group in France, its first international partner, and Bon Preu in Spain followed by Canada-based Sobey’s, Sweden’s ICA and U.S. since 2013, the pace of its fulfillment deals took off around 2017. But, its driverless last-mile delivery aspirations will take longer to materialize.”Īlthough Ocado has had a warehouse solutions partnership with supermarket chain Morrison’s in the U.K. “In ten years time, the majority of its warehouse product picking could be achieved by robots. “Ocado is unique in that it offers an end-to-end service,” he said. But, it still faces a long journey to achieving full automation according to Ioannis Pontikis, an equity analyst who covers the European consumer sector at U.S. In the wake of a pandemic that increased online shopping penetration, and continues to create acute labor shortages, Ocado is hoping retailers will be drawn to the tech-driven efficiencies of its platform amid pressure from e-commerce giants like Amazon.
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