The ongoing scepticism from certain quarters about Ocado’s ability to turn a profit has become a familiar companion to the online grocer’s results.
The ongoing scepticism from certain quarters about Ocado’s ability to turn a profit has become a familiar companion to the online grocer’s results. And the ire of its critics was stirred again this week when boss Tim Steiner reported widening pre-tax losses, despite growing sales.
Ocado’s detractors will feel their doubts remain well founded until the retailer demonstrates consistent profitability. But, as the rise in Ocado’s share price in the last year shows, the grocer continues to create a compelling vision for its future and, just as significantly, that of the industry.
How Ocado creates the market share it needs to deliver a profitable future remains its great challenge. But the online grocery market is worth £6.5bn a year and forecast by the IGD to grow 124% over the next four years. Ocado is not only ideally placed to leverage the increasing momentum but is growing faster than the sector.
However, the retailer’s impact is far broader than merely being in the right place at the right time. In terms of technology, service and positioning, Ocado has not only led the sector - most notably in fulfilment where orders delivered on time are now running at 95% and item accuracy at 99% - but it has forced its rivals to step up their game.
The brand also continues to get traction, building its consumer base and raising the industry bar when it comes to customer experience - Ocado claims that the number of frequent customers is increasing at more than twice the rate as the growth in active customers.
The debate around profitability will remain. But Steiner and his departing co-founder Jason Gissing not only deserve credit for building from scratch one of the most enduring brands of the digital revolution but one that has had a defining impact on the broader market.