Ocado adopts 'hub and spoke' model to continue expansion

Ocado is implementing a cross-docking operation in Weybridge that will help the company extend its delivery service south of London.

The ‘hub and spoke’ model will enable 2.1 million of the 3 million households within the M25 area to be reached.

The system is based on detachable pods that can be loaded onto local delivery vehicles. Six pods fit on to a 12m articulated lorry and can be delivered pre-filled with appropriate orders to Weybridge from the main Hatfield distribution centre in around two-and-a-half hours.

‘We are looking to develop similar spokes in other areas where there is a catchment area of 1 million households,’ said joint managing director Nigel Robertson. ‘Two-and-a-half hours’ drive from Hatfield gives us plenty of potential areas to develop.’

A second spoke is likely to open in southeast London in the spring covering distribution into Kent, with another centre north of Hatfield expected to follow to serve the Midlands.

‘The model allows us to expand our operations gradually and support new markets while we are building further distribution centres,’ said Robertson.

Customers are encouraged to select delivery times that help to make Ocado’s operation more efficient with the use of Descartes’ Fleetwise system.

This matches orders to truck availability in real-time. A green van symbol appears next to the delivery window choices on the Web site to inform shoppers when Ocado will be in the neighbourhood.

Ocado delivers 5,000 orders a week with an average substitution rate of 2 per cent. This year’s turnover is expected to be around£25 million, with orders reaching 20,000 a week by the end of next year.