After a third fire at one of its automated distribution centres over the weekend, Ocado’s international partners must be looking on with a deal of concern.
Ocado is a strange beast, in that it has attracted a number of fairly vociferous critics since its inception expressing a huge amount of cynicism over its prospects and its profitability.
It feels like I’ve been in a fairly small minority of onlookers who have always been generally positive about the business, not only in terms of its potential as a retailer, but in terms of its potential as a technology provider to other retailers.
Although it has jettisoned some non-core retail activities, like Fabled and Sizzle, I still believe that it has a huge amount of untapped potential in terms of serving other retail sectors beyond grocery. Its technology is surely applicable to other markets such as fashion, home improvement and electronics, so it wouldn’t be a great surprise to see it inking deals with retailers other than supermarkets in the future.
Also, there must be other areas of activity, such as general warehousing and distribution, where its technology would be hugely beneficial in terms of efficiency, so again I would not be surprised to see it expand into other areas beyond retail too.
Its retail business managed to complete the transition from Waitrose to M&S with a great deal of panache and seemingly escaped relatively unscathed in terms of losing customers upset about the switch, despite some misgivings that some Waitrose loyalists would be unhappy about the move. So far, so good really.
Concerns over technology remain
Even as an ardent supporter of Ocado I must confess to be more than a little concerned about the fact that its technology has an alarming propensity for self-immolation.
The fire at Erith this weekend was the third incident that has impacted the business in recent years and, although it was nothing as disastrous as the Andover fire which completely destroyed the building, it has still managed to disrupt thousands of orders which have either been cancelled or switched to another distribution facility for fulfilment.
While the business coped admirably with the Andover disaster and is seemingly likely to return to full operationality at Erith within days, the real worry for me is that any potential partner around the world might be looking at this situation and being more than slightly concerned about taking the technology on.
Its partnerships in markets like the USA and France seem to be progressing very well indeed, but the likes of Kroger and Casino must be looking on with more than a slight degree of consternation.
I really hope that this succession of unfortunate events does not derail Ocado’s very real potential to become a global technology giant. It is great to have a British success story which is leading the agenda in the grocery ecommerce industry and is attracting partnerships from highly-respected retailers around the world.
While the short-term logistical recovery will soon be completed, a lot of focus surely now has to be on communication and reputation building as the Erith incident will have raised eyebrows in boardrooms around the world.
I clearly have very little idea about how robots and fire prevention systems work, but one can only hope that some enhanced vigilance or system improvements will make this kind of incident much less likely to happen in the future.
It would be such a shame if a company with such evident potential and capabilities was hindered by these problems, particularly as Ocado, alongside its more traditional peers, has done such a fantastic job helping to feed the nation during the course of the pandemic.
I look forward to Ocado returning to business as usual and continuing to play its pivotal role in driving grocery ecommerce around the globe.
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