Ocado and Amazon grocery delivery The story of two rivals.
Ocado is a British online supermarket. In contrast to its main competitors, the company has no chain of stores and does all home deliveries from its warehouses. Ocado has been voted the best online supermarket in the UK by Which? readers every year since 2010. The company was floated on the London Stock Exchange on 21 July 2010 and is a member of the FTSE 100 index.
Ocado was founded in April 2000 by Jonathan Faiman, Jason Gissing, and Tin Steiner, former merchants bankers with Goldman Saches. 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.
In September 2006, Michael Grade became non-executive chairman of Ocado, shortly after Goldman Sachs was appointed as financial advisers, fuelling speculation which had already started about a listing for the company. In November 2008, the John Lewis Partnership transferred its shareholding of 29% into its staff pension fund. It also agreed with a five-year supply deal with the business, replacing its previous one-year rolling deal. This deal was replaced in May 2010 with a 10-year branding and supply agreement. Procter & Gamble took a 1% stake in the company the same year. In February 2011, the John Lewis pension fund sold off its entire Ocado shareholding.
On 13 July 2009, Ocado released their 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. 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. In 2015, Ocado launched the first grocery app for the Apple Watch. In July 2010, following considerable speculation, Ocado undertook a stock market initial public offering.
In November 2017, Ocado’s shares up by 20% following the fulfillment of a deal with the French Casino Group. In January 2018, Ocado signed a deal with the Canadian supermarket chain Sobeys. In May 2018 Ocado signed a deal with Kroger, the US retail company, to build up to 20 Customer Fulfillment Centres (CFCs) using Ocado’s automated technologies.
Amazon Delivery services:
AmazonFresh is a subsidiary of the Amazone.com American e-commerce company in Seattle, Washington. It is a grocery delivery service currently available in some U.S. states, London, Tokyo, Berlin (including Potsdam), Hamburg and Munich.
AmazonFresh has rolled out its services gradually, targeting specific parts of various metropolitan areas and partnering with local speciality stores for delivery of local items. (The website allows users to check availability by ZIP code.)
In March 2017, Amazon announced AmazonFresh Pickup, a drive-in-type grocery store for Amazon Prime subscribers, launching in beta on March 29. It’s a delivery service that lets users shop online, reserve times to pick up the groceries and have them loaded into their cars at the store.
In the United Kingdom, Amazon signed a deal with British supermarket chain Morrisons to provide supplies for Pantry and Fresh.
In July 2017, it was reported that Amazon Fresh was selling meal kits.
On November 2, 2017, Amazon announced it was discontinuing its Fresh service to areas in New York, New Jersey, Pennsylvania, Delaware, Maryland and California.
As we know that these two companies are the big name of online grocery & supermarkets. Now they become rivals of each other in their business. As we know Ocado is using 700 robots in its production of products. The robot is so powerful as it increases the efficiency of this business.
When Amazone bought Whole Foods almost a year ago, Ocado Group was one of the few retailers to see its shares go up.
That’s because there were hopes the internet behemoth could swallow up the British online grocer, too.
But the deal actually had another impact on Ocado. It made supermarkets around the world quake at the thought of Amazone online grocery rampage. They turned to Ocado to help them fend off the threat.
After a series of smaller tie-ups, the company has announced the big one: a partnership with Kroger, the second biggest U.S. grocer after Walmart. This has been a long time coming – it’s been chasing a deal with a major American supermarket for much of the last five years.
This partnership, which will see Kroger license Ocado’s technology to expand its own home-delivery business, could include construction of up to 20 distribution centers over the first five years. This puts it on a completely different scale to Ocado’s other contracts, with France’s Casino Guichard-Perrachon and Canada’s Sobeys.
There is no doubt this is good news for Ocado. But the worry with the spate of agreements that the company has announced over the past six months is that it must keep investing. Each has a peak cash flow requirement of about 30 million pounds ($40.6 million). That just reinforces the fear with the Ocado investment case: that it’s all jam tomorrow.
Ocado seems to have caught on to this concern: Kroger will take a 5% stake in the company, injecting 183 million pounds. Added to the about 140 million pounds from a share sale in February, and the company will have more than 300 million pounds of firepower.
The two companies will also explore ways of using Kroger’s balance sheet — the U.S.’s second-biggest grocer (behind Walmart) had total assets of $37 billion as of February 2018 — to fund some of Ocado’s investment.
That could include more payments from Kroger upfront, and lower fees over time than customers pay for other deals, although Ocado says the overall economics won’t substantially differ from the other arrangements. Shares in Ocado rose as much as 50.7% on Thursday, to a record 831.8 pence, the most since its 2010 initial listing.
That reflects the undoubted potential of the Kroger deal. But it shortens the odds of Ocado and its investors finally finding an exit through a sale to a bigger retailer. After all, Ocado’s had a stellar run over the past six months. But the preceding seven years have really tried investors’ patience.
Kroger will have an overall 6% stake in the company — it already had a 1% stake before this deal was announced, so that makes it a natural candidate for increasing its holding or acquiring the company.
Meanwhile, the business of dropping groceries as U.K. customers’ doors jars with Ocado’s push to become a whizzy technology company. Its existing contract to be supplied with products by Waitrose expires in 2020. That could be a natural point to review this operation, particularly if Waitrose were to be sold by the John Lewis Partnership.
With the surgeon Thursday, Ocado shares have tripled since it announced the agreement with Casino in November. The company’s enterprise value has jumped to three times forward sales, nearly closing its discount to Amazon. To justify such a lofty valuation it needs the raft of contracts it has secured over the past six months to live up to their huge potential. There’s certainly execution risk here.
Now we have to see what happen in the next ten to fifteen years , whose shraes go up and whose go down, profits & loses.Let see what happened next. Stay tuned to us for more news.