{"id":16736,"date":"2016-11-17T22:44:31","date_gmt":"2016-11-18T03:44:31","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/ocado-changing-grocery-shopping-in-the-uk\/"},"modified":"2016-11-17T22:44:31","modified_gmt":"2016-11-18T03:44:31","slug":"ocado-changing-grocery-shopping-in-the-uk","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/ocado-changing-grocery-shopping-in-the-uk\/","title":{"rendered":"Ocado \u2013 Changing Grocery Shopping in the UK"},"content":{"rendered":"

Ocado was founded in 2000 with the mission of providing better service, value and choice to customers[i]<\/a> buying groceries by creating the UK\u2019s best online supermarket.<\/p>\n

While this seems like a novel idea, around 1910, Londoners were enjoying \u201cgoods from all around the world\u201d delivered to their doorstep and ordered by telephone in quantities as deemed fit by the customer.[ii]<\/a> The war and the shift in consumer tastes have made supermarkets the go to place for grocery shopping.<\/p>\n

What is Ocado doing that\u2019s different and disruptive? Smart use of technology, better operations than traditional supermarkets and\u2026 more smart use of technology.<\/p>\n

How Ocado operates:<\/em><\/p>\n

Customers place an order online or via their mobile application and choose a time slot for deliveries. \u00a0Groceries are delivered in hourly time slots by drivers using Ocado owned refrigerated vans. Products are always fresh and delivery slots always respected. Ocado has the capabilities to deliver other retail partners\u2019 orders as well as the ones placed on its platform.<\/p>\n

They are simplifying the operating model for a \u201ctraditional\u201d retailer, by delivering goods from one of its 25 warehouses and distribution points directly to its customers[iii]<\/a>.<\/p>\n

Ocado\u2019s use of the latest technologies:<\/em><\/p>\n

Ocado does two things extremely well: being at the forefront of technology for collecting orders and creating a state of the art system for fulfilling orders.<\/p>\n

When the iPhone became a big deal in 2009, they created \u201cOcado on the Go\u201d[iv]<\/a>, becoming the first UK supermarket with an iPhone app. Just a year after, they launched a service enabling customers to order by voice.[v]<\/a> Most recently, they developed the world\u2019s first grocery shopping app[vi]<\/a>, which seamlessly integrates with Ocado\u2019s online and mobile app systems, allowing customers to place instant orders, complete orders across all three devices and, most importantly, check out in under 15 seconds.<\/p>\n

They have developed in-house systems for receiving, putting away and managing stock, picking and organising orders, loading delivery vehicles, routing and delivering orders. This is how they have managed to achieve the lowest inventory and product waste level in the industry and a smaller customer orders delivery fleet size.[vii]<\/a> However, their latest stint is building a modular wireless warehouse automation platform called Ocado Smart Platform[viii]<\/a>, which uses Artificial Intelligence and robotics[ix]<\/a> and maximises warehouse efficiency, reduces the need for human interference and speeds up orders picking, preparation and delivery. Given its potential in the retail industry and other ones (construction sites, factories), they are selling the system to interested parties.<\/p>\n

If you\u2019re thinking this sounds too good to be true, you might be right. As of mid-November, Morrisons, UK\u2019s fourth largest supermarket, announced it will start operating online and deliver using Amazon (Amazon Fresh does not exist in the UK yet)[x]<\/a>. With Amazon\u2019s competencies in logistics and Morrisons\u2019 very competitive pricing, this partnership is the first one which presents a real threat to Ocado\u2019s business.[xi]<\/a> Despite the negative reaction of the markets to these news, I believe Ocado has the potential to stay relevant by:<\/p>\n