Introduction
Ocado is an online supermarket in the UK which was founded by Jonathan Faiman, Jason Gissing and Tim Steiner in April 2000. The company is the largest B2C retailer in the UK and the largest online food retailer in the world. It not only sells fresh food, but also sells other foods, toys and medical products. On 21 July 2010, Ocado was floated on the London Stock Exchange which became a member of the FTSE 100 Index (“Ocado”, 2020).
Operation Pattern
Ocado has on chain of stores which are all online stores and all of the goods are picked from the warehouse and deliver to clients’ homes.
1. B2C And O2O E-commerce Model
Ocado uses a B2C e-commerce model that has an online shopping platform (www.ocado.com) and mobile terminal applications to meet consumer needs. Consumers can use the fragmented time to select ingredients and supplies at any place instead of going to the physical store to choose which could save consumers time and energy.
In addition, O2O is also an important e-commerce model in the company’s operations. Ocado has cooperated with some offline supermarkets, such as Waitrose supermarket, morrisons supermarket as well as Marks and Spencer supermarket, through providing the website, warehousing, and distribution services, using Ocado’s advanced technology to deliver the goods to customers from these supermarkets.
2. Supply Chain Model
Ocado uses a flat supply chain model which means the suppliers ship the goods directly to the Central Fulfilment Centre (CFC), and then deliver the goods to the consumer’s home according to the order. The company has a 295,000-square-foot operations center (CFC) in Hatfield, England, which can meet customers’ needs for purchasing multiple items. Actually, the company sells more than 21,000 different products, most of which are purchased through Waitrose which is the leading premium supermarket in the UK. It is beneficial to the centralized management of the source of goods. The following figure is a comparison between the traditional and the Ocado application chain model.
3.Ocado Smart Platform
Ocado Smart Platform (OSP) is the world-class storage and automatic picking system for operating an online grocery business. The facility was officially put into use in December 2016 and their operation center (CFC) is a grid equivalent to a football field which can accommodate up to 1100 robots (Platform et al., 2020). The grid can hold 250,000 storage locations so that robots can pick up crates from the grid, then take them to a fixed place, and finally workers will pack the goods according to customer orders. Robot movements and crate storage locations are managed and optimized by a central “control system” using artificial intelligence (“What is OSP?”, 2020).
4. Logistics Service
The logistics center uses pipeline operations to improve efficiency, and some non-food goods operations will use robots for classification. Whether it is trunk transportation or terminal delivery, Ocado selects Mercedes-Benz to deliver items. The terminal delivery vehicles have internal shelves to effectively use the loading space. In addition, it puts different colors of boxes on the shelves for the storage of different fresh foods, puts them in different boxes, and delivers them to customers at a specific temperature according to customer requirements.
Successful Reason
I used to buy somethings through their applications. My consumption experience is that the shopping process is simple, the products are sorted on the web page clearly and the items are complete, the delivery speed is fast, and the service attitude is good. These are enough to make the company successful
1.Costs are low
Ocado’s operating model eliminates the cost of many traditional stores, including the cost of re-inventory and redistribution. In addition, because of no physical store, the company reduces the cashier checkout process, thereby reducing labor costs. The company uses artificial intelligence systems to accelerate inventory turnover and reduce inventory waste, which could greatly reduces operating costs and increases the sustainability of the food supply chain.
2.Guarantee customer benefits
Ocado is committed to providing customers with the best online grocery store experience. The company provides customers with a variety of shopping channels, such as online stores, apps and voice ordering, which could save consumers time and effort to shop in the store. The OSP system can accurately predict the choice of consumer goods to reduce alternatives and avoid shortages. In addition, the short supply chain and fast delivery speed ensure the freshness of the food. These are the reasons why consumers like to buy things in Ocado.
3. Continuous innovation
Online retail is a relatively new industry-companies doing business in this area must adopt emerging technologies to stay ahead of the competition or they will perish. Ocado has an innovative mind that keeps pace with the times. The research fields of the technical team are extensive and in-depth, and it has built almost all the technologies required by fresh produce e-commerce so that it can gain a foothold in the entire industry. The company has occupied a huge market by creating an OSP intelligent platform, establishing an efficient CFC operation system, and creating a rapid cold chain and constant temperature logistics distribution. However, the company’s innovation does not stop, they are a continuous innovator which pioneering the future through serial technology innovation.
Ocado uses advanced information technology and the digital economy model has won the favor of the public, and its success is a reflection of the mainstream trend of the data economy.
Reference
- Ocado. (2020). Retrieved 5 March 2020, from https://en.m.wikipedia.org/wiki/Ocado
- Platform, 0., Balloon, M., Logistics, W., WMS, M., Balloon, M., Logistics, W., & WMS, M. (2020). AmazonFresh and the Ocado Smart Platform – Balloon One. Retrieved 5 March 2020, from https://balloonone.com/blog/2018/09/03/amazonfresh-ocado-smart-platform/
- Operating model – Ocado Group Plc Annual Results 2013. (2020). Retrieved 5 March 2020, from http://results13.ocadogroup.com/our-business-and-strategy/operating-model
- What is OSP?. (2020). Retrieved 5 March 2020, from https://www.ocadogroup.com/our-solutions/what-is-osp
- Who we are. (2020). Retrieved 6 March 2020, from https://www.ocadogroup.com/about-us/who-we-are
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