Ocado signs a first deal in Asia
After Carrefour closed Chinese operations earlier this year, the British e-retailer Ocado signed a first Asian deal in early December. It will launch into Japan, in partnership with the Aeon retailer. Ocado will build an initial warehouse in the Tokyo region for the Japanese supermarket chain, with potentially more to cover Japan. The new online platform will fulfil national orders of US$5.52 billion in sales by 2030. Ocado will receive revenue in three parts : a payment when the deal is signed, a second when the facility is ready and a third from a percentage of the sales processed through the warehouse.
For Aeon (sales of US$69 billion in 2018 up by 2%), this can ensure efficient fulfilment of e-commerce orders, a critical advantage for online retail. It offers competitive advantage over local rivals such as Walmart’s Japanese supermarket chain Seiyu and also competes with Amazon Fresh. According to Kantar, e-commerce accounted for 7.7% of the Japanese grocery market in 2018. In comparison, Global Data predicts that online retail sales in Japan are projected to grow at a C.A.G.R. of 10.1% by 2023.
Founded two decades ago, Ocado operated for several years as an online grocer in the U.K., where it represents only 1.4% of the local grocery market. However, the business is considered as one of Europe’s most-promising technology ventures, with a valuation of US$10.5 billion. The Ocado Solutions division started licensing its technology all around the world. An array of traditional grocers eager to boost their online sales includes Sobeys in Canada, Kroger in the U.S. (in which Ocado has a 6%-stake), Monoprix in France and Coles in Australia. Ocado sells software to make deliveries more efficient. Fully integrated and automated warehouses use robotics to fulfil an order of 50 articles in about 7 minutes, compared to 30 minutes if picked by staff. The picking rate at Ocado’s warehouses is of 7.14 products per minute compared to a rate of 1.7 product each minute for traditional grocers.