Ocado was founded in 2000 by a trio of former merchant bankers. Originally, it was positioned as an online grocery retailer. Since then, it's pivoted into a solutions provider that develops software and automation systems for retailers such as Morrisons, Sobeys, and Coles. Following the recent acquisition of three robotics companies, it's set to develop its technological division even further in the coming year. Find out more with these 20 things you didn't know about Ocado.
1. It was founded in 2000
Ocado can trace its origins back to April 2000. That was the time three merchant bankers with Goldman Sachs decided to get out of finance and move into retail. Its founders, Jonathan Faiman, Jason Gissing, and Tim Steiner, initially christened their fledgling company L.M. Solutions. In October 2000, they partnered with the grocery chain Waitrose; in June 2001, they re-branded as Ocado, and in 2002, they began rolling their pilot scheme out into a nationwide delivery service.
2. It's a little bit fruity
Figuring out what made a company choose the name it did can be tricky. Half the time, there's no obvious connection between the brand and the name. Even the company itself can often have a hard time explaining the reason behind the decision. With Ocado, it's a bit simpler. According to Wikipedia, Jez Frampton, CEO of Interbrand and non-executive director of Ocado, has said that while the name "Ocado" is "a made-up word," it's "intended to evoke fresh fruit". Neil Taylor, an Interbrand consultant, has gone one step further and claimed the name is a variant on the avocado fruit.
3. It created its first app in 2009
By 2009, Ocado was well established. It was also on the brink of tapping into a new kind of market with the creation of its first app for the iPhone. Named 'Ocado on the Go,' the app gave added convenience to shoppers by allowing them to complete their grocery orders on the go. The following year, it made the app available to Android devices. In 2015, it made history when it created and launched the first grocery app available on the Apple Watch.
4. It went public in 2010
In 2010, Ocado launched its initial public offering (IPO). As Wall Street Journal reported at the time, at least half of the shares were bought by existing investors, including asset manager Fidelity. The IPO ranked as one of the worst debuts on the London Stock Exchange. The top of the initial price range was 275 pence, but the lack of demand resulted in the share price being slashed to just 165 pence.
5. It's socially active
Since its inception, Ocado has adopted a responsibility strategy that covers education, entrepreneurship, environment and eating well campaigns. The Ocado Foundation forms an integral part of the strategy. Aimed at supporting charity and fundraising activities across the UK, it averages around £55,000 in donations each year. Its most recent endeavor is the Ocado Foundation For Good campaign with BizGive. As mfip.org.uk writes, the initiative will support ‘the many rather than the few’ by giving grants of up to £1,000 to charities, community organizations, community interest companies, academic institutions, and local authorities for community projects. Beneficiaries of the grants will need to demonstrate a focus on three key areas: skills for the future, natural resources, and responsible sourcing.
6. It launched the Ocado Smart Platform in 2015
In 2015, Ocado expanded its offering with the launch of the Ocado Smart Platform, a software and hardware platform for operating retail businesses online. The platform includes a suite of tools designed to support retailers with mobile apps, voice ordering, and webshops. The technology used in the platform incorporates AI, Robotics, Digital Twins, Cloud, Big Data, and IoT, and is protected by around 200 patents. Some of the key clients to have signed up for the platform include Morrisons, ICA, Group Casino, Sobeys, Kroger, and Bon Preu. Thanks to the success of the platform, some predict that Ocado's share prices will jump to £100 per unit in the next ten years.
7. It was the first UK supermarket to launch an app for Alexa
In 2017, Ocado became the first UK supermarket to launch an app for Amazon's Alexa voice assistant. The app allows users to add products to an existing order via voice command. It also offers product suggestions based on previously bought items. According to a statement released by Ocado, the app provides users the “convenience and flexibility to shop however they prefer.” Lawrence Hene, Ocado’s marketing and commercial director, added: “Consumer demand for increasingly convenient ways to shop is growing rapidly and we’re excited to be the first supermarket in the UK to offer this technology, making customers’ lives ever easier. Alexa will add any item to your Ocado basket simply by asking her to do so. It’s as easy as that.”
8. It nearly went up in flames
In February 2019, Ocado suffered a major setback when its customer fulfillment center in Andover, Hampshire, caught fire. The site, which handles 10 percent of all UK orders, burned for more than three days. During the fire, more than 25 fire engines and 300 firefighters were called in to tackle the flames. All residents within a 1.6 km radius were evacuated and a 500-meter exclusion zone was established. After major rebuilding and renovation, the site is due to reopen towards the end of 2021.
9. It dropped Waitrose for M+S
In 2010, Ocado signed a 10 year supply and branding deal with the premium grocery chain Waitrose to sell its products. When the contract expired, Ocado entered into a new venture with Marks & Spencer. Despite some initial trepidation from Ocado users loyal to Waitrose, the move proved successful. A surge in demand following the announcement of the new venture forced Ocado to temporarily suspend deliveries. During the first quarter of 2021, it experienced a 40% uptake in sales - although, in fairness, that may reflect the increasing shift towards online shopping during the pandemic as much as the UK's appetite for Percey Pigs.
10. It doesn't mind working with its rivals
While most companies would think twice before teaming up with their rivals, Ocado does things differently. In 2014, it entered into an agreement with Morrisons supermarkets to provide its website, delivery services, and warehouse facilities. All orders placed via the Morrisons website are fulfilled by Ocado's Dordon center in the Midlands. Morrisons is reported to have paid an initial £170m for warehousing at the center, along with a further £46m to establish a delivery fleet and other services.
11. Its warehouses are state-of-the-art
When it comes to technology, Ocado is way ahead of the game. It even has its own tech division - Ocado Technology. In addition to designing the website and apps, customer service systems, machine learning-based fraud detection, and forecasting and routing systems, the division is also responsible for the company's state-of-the-art warehouses. Each warehouse is built around a 3D grid structure. Groceries are stored in crates within the structure. Taking responsibility for moving, collecting, and taking the crates to pickers are an army of 1000 robots managed by a central control system optimized by AI. The robots, which communicate on a 4G network to avoid colliding with each other, are cable of processing 65,000 orders each week.
12. It's boosting its robotic manipulation capabilities
Ocado has always stood apart from the competition thanks to its technological innovations, and now it's set to take things even further. As techwireasia.com reports, Ocado kicked of April 2021 by acquiring San Francisco-headquartered robotics firm Kindred Systems and Las Vegas firm Haddington Dynamics for $262 million and $25 million, respectively. The technologies from both companies will be used to replace the two human driving processes in Ocado warehouses - decanting and picking - that currently cost the company around $9 million per warehouse per year. Ocado has also confirmed plans to acquire Haddington Dynamics, a small Las Vegas-based company that specializes in developing robotic arms for customers that include DuPont and NASA.
13. It's moving in a new direction
Ocado may have begun life as an online grocery retailer but in recent years, it's moved away from its original business model to become a provider of e-commerce and fulfillment technology for other grocery retailers. As techwireasia.com notes, around 33% of its revenue is now generated by its solutions division, a figure that's expected to increase as it continues to form new partnerships both in the UK and abroad. Ocado now describes itself as a ‘technology-led, global, software and robotics platform business, with a strong retail heritage’.
14. It escaped the pandemic unscathed
The Covid-19 pandemic may have dealt a devastating blow to many businesses, but some unquestionably came out of lockdown in a stronger position than ever. Ocado was one of the winners. With stay-at-home orders in place, more and more of us turned to online grocery shopping, much to the benefit of retailers like Ocado. Although it initially struggled to keep up with the surge in demand at the beginning of the outbreak, it quickly adapted by adding more workers and delivery drivers to its payroll. In the end, it emerged as one of the best-performing public companies during the pandemic.
15. It launched in the US in 2018
In May 2018, Ocado made its move into the US via a new partnership with Kroger. As part of the partnership, Kroger bought a 5 percent stake in the company. In return, Ocado agreed to provide Kroger with 20 fulfillment centers. After news of the agreement broke, Kroger share prices climbed by an impressive 44 percent. The first Customer Fulfillment Centre was launched in April 2021 in Monroe, Ohio. The remaining 19 centers will be rolled out in locations including Great Lakes, Pacific Northwest, West Regions, Monroe, Frederick, Pleasant Prairie, Groveland, Forest Park, and Dallas.
16. It's expanding its international presence
The US isn't the only new territory Ocado has broken into. Over the past decade, it's made huge strides in increasing its global presence. So far, it's partnered up with the Catalan retailer Bon Preu Group in Spain; Groupe Casino in France; Sobeys in Canada; ICA in Sweden; and Coles in Australia. In addition, it now has six technology centers spread throughout Europe, including those in Poland, Bulgaria, Spain, and the UK.
17. Only one founding member remains
When Ocado formed, it was with three founding members. Today, only one of them remains with the company. Jonathan Faiman left just prior to the company's IPO in 2010. Jason Gissing left in 2015. The sole remaining founder, Tim Steiner, now serves as CEO.
18. It pays to be an Ocado director
Ocado directors are exceedingly well compensated for their troubles. In 2019, CEO Tim Steiner received a £54 million end-of-year bonus, meaning his total take-home pay for the year was a massive £58.7m. Other directors received a share of a £88m pot. Even leaving aside the bonus, the salaries of Ocado's top execs are jaw-dropping: according to the company's annual report, Steiner earns over 2600 times more than the average Ocado employee.
19. There's trouble at the top
According to Ocado, executive pay is “more at risk than wider employee pay due to the use of variable pay.” That might be true, but it's unlikely to appease the company's investors. 2019's huge bonuses came just weeks after shareholders voted against excessive pay at the company's annual meeting. As the Daily Mail writes, Ocado's decision to ignore their shareholder's decision earned them a place on the Investment Association trade body's register of FTSE 100 firms that have drawn condemnation over fat-cat pay. Weighing into the debate, Labour MP and Commons business committee member, Peter Kyle, said: 'When it is such an eye-watering amount of money, it's very hard to see how customers, shareholders and front line staff could possibly benefit to the same degree. 'Shareholders and remuneration committees need to take a deep breath and have a very careful look at how they measure performance,' he added.
20. It generated $2.988B in 2020
Ocado's revenue has been steadily increasing for the last few years, but last year saw its biggest spike to date. Thanks at least in part to the surge in online ordering fueled by the Covid-19 pandemic, the company's annual revenue for 2020 was $2.988B, a 33.55% increase from 2019.
Written by Allen Lee
Read more posts by Allen Lee