Our scalable, modular solutions
The Journey of Ocado Solutions
Front end interfaces
Ocado powered webshop
Table and mobile apps
Software powering the site content and algorithms for analysing customer data
Ocado powered supply chain
Centralised warehouse with Ocado fulfilment MHE
Ocado powered store pick software
Last Mile Operations
Ocado powered delivery process
Routing and in-van technology
Potential for alternative delivery methods such as courier and click and collect
Ocado Solutions focuses on helping retail clients grow their online businesses profitably. Our objective is to understand the problems our clients are facing and provide modular, scalable, customised solutions to meet their needs. Leveraging our proprietary best-in-class technology with the Ocado Smart Platform, and the knowledge and experience of Ocado's retail business, we aim to be a long-term partner to our clients, vested in their success to become the e-commerce solutions partner of choice for leading retailers globally.
The strategic priorities of retailers vary significantly across the world depending on their scale, maturity and appetite for change. Ocado Solutions aims to provide bespoke, flexible capabilities to our partners depending on their requirements and the service they wish to offer their customers.
Ocado Solutions will provide retailers with the flexibility to customise the end-to-end process to best fit their current assets and strategic vision.
Starting with the front end, our capabilities will allow retailers to build best-in-class functionality across a spectrum of interfaces from mobile platforms to Alexa voice-activated devices to ensure their customers can shop in the most convenient way for them.
From a fulfilment perspective, customers can chose to operate a centralised warehouse or via a store picking solution. A centralised option would utilise our market-leading, proprietary physical infrastructure solution and algorithms to enable sustainable, operationally efficient fulfilment on a larger scale. This solution is modular in nature (can be built to different sizes) and scalable (can be increased in size over time), and therefore can grow stage by stage as the retailer scales their online operations.
Although offering weaker economics at scale, the store picking functionality allows retailers to fulfil orders through their existing store estate, providing retailers a quick to market and flexible fulfilment option to service online customers. The store picking solution is beneficial as it provides retailers with the option to fulfil customer orders in catchments where it may be uneconomical to have a centralised fulfilment centre, but where it might be appropriate to move to more efficient CFCs once sales volumes have scaled. These fulfilment solutions are not mutually exclusive and can be operated in conjunction with each other to enhance the flexibility of our offering for different partners.
Finally, our Solutions business will have the potential to support alternative last mile operations such as delivery, click and collect and courier services. All Solutions will leverage our proprietary technology – the Ocado Smart Platform.
Our Solutions business allows partners to build and scale their online operations at significantly lower cost to alternative solutions. Partners will benefit from using proprietary technology that has been trialled and tested in our own Retail business, and that has been designed with the complexities of grocery retail in mind. To further enhance the customer proposition for retailers, other products, applications or features can be integrated alongside our Ocado Solutions capabilities such as general merchandise, promotional activities, or speciality range extensions. We would expect these additional features to help increase customer retention and drive growth.
Our Ocado Solutions business offers significant value creation opportunities in the UK and abroad and we are pleased with the progress of this business segment in an exciting time for the industry. Looking ahead, we are confident that we will be able to do further deals with the momentum of new signings building over time.
Modules currently used across our partners
The Morrisons partnership utilises all of our Ocado Solutions capabilities
Since launching our first commercial partnership in 2014, Morrisons.com sales have grown significantly. This further demonstrates the quality of our platform and its ability to provide an attractive service for retail customers. With Morrisons.com now close to reaching its original agreed capacity, we announced an extension to our partnership in June 2016 to allow them capacity in our Erith CFC, enabling their business to continue to scale alongside customer demand. In addition to this, we also agreed to provide Morrisons with store picking capabilities, where customer orders are picked and packed directly from their existing stores. Despite expected weaker economics at scale, this alternative picking solution enables full geographic coverage to areas where their current centralised picking capacity does not reach.
Partnership with a regional european retailer
This partnership will utilise Ocado's software solutions
We announced our first international partner for our Solutions business earlier this year. Under this agreement the partner will have access to our full software platform, know-how and support services required to build an efficient online grocery business. The partner will initially operate from a manual warehouse, with the option to progress to a full automation solution at a later date. This agreement represents a significant step in the evolution of our business and delivery of our strategy, demonstrating the flexibility of our solutions.
The Groupe Casino partnership will utilise our front end software and interfaces, our centralised fulfilment, and our last mile delivery solutions
At the end of the year we were delighted to announce our second international partnership, with Groupe Casino in France. Groupe Casino is one of the world's largest and most respected multi format and multi channel grocery retailers. Under the agreement Groupe Casino will gain access to the full end-to-end Ocado Smart Platform solution, including the construction of our latest generation, state-of-the-art automated warehouse, Ocado's best-in-class front-end website functionality, last mile routing management and big data and real time implementation. Groupe Casino's banners will benefit from our market leading grocery e-commerce platform, firstly through Monoprix.fr. The agreement sets out plans for the immediate initiation of the development of a CFC using our proprietary mechanical handling equipment to serve the Greater Paris area, the Normandie and Hauts de France Regions. We expect this deal to create significant long-term value to the business.
The agreement provides exclusivity benefits to Groupe Casino in France as long as they continue to commit to grow their online operations over time. As well as some upfront fees, which will enable Groupe Casino's systems and processes to be integrated with the Ocado Smart Platform, fees will be based on the capacity utilisation within the CFC and will scale as Groupe Casino grows their online operations. The deal with Groupe Casino is a major validation of our business model.
The Sobeys partnership will utilise our front end software and interfaces, our centralised fulfilment, and our last mile delivery solutions
At the beginning of 2018 we were pleased to announce the signing of an agreement with Sobeys to partner with Ocado Solutions to develop an online grocery business in Canada using the Ocado Smart Platform. Sobeys is Canada's second largest food retailer, operating more than 1,500 stores across the country, and generating sales of C$23.8 billion in fiscal 2017. Ocado will partner exclusively in Canada with Sobeys to launch their end-to-end solution for online grocery services. This will include best-in-class front-end website functionality, supported by Ocado's proprietary 'web shop' and mobile grocery ordering applications; construction of Ocado's latest generation, state-of-the-art automated warehouse designed specifically for grocery e-commerce; and last mile routing management technology to optimize delivery truck efficiency, customer service excellence and punctuality. Sobeys and Ocado will develop their first CFC in the Greater Toronto Area. The build is expected to take approximately two years. In addition to this initial CFC, Sobeys and Ocado will consider developing other CFCs in Canada's dense urban areas. Sobeys will pay Ocado certain upfront fees upon signing and during the development phase, then ongoing fees linked to installed capacity within the CFC and service criteria.