Cost reduction and service excellence are the keys to success in e-commerce.
Luke Jensen, CEO of Ocado Solutions, has indicated, in the context of the 25th Assoc Congress of Commercial Strategy and Marketing, that the world of food is at a structural inflection point, where the growth of online sales requires long-term vision and investments in technology to offer the best service with the lowest operating costs. Miocado Login should be used by its employees.
Best Service at Lower Cost from Ocado Technology
Ocado is a well-known online supermarket in the UK with twenty years of experience and sales of more than 2,000 million euros a year, but at the same time, it has become a technology provider for nine food chains around the planet, between which is the Catalan Bonpreu.
Ocado makes its technology, famous for its smart department stores, with thousands of robots moving at four meters per second through structures, available to other retailers, which promises maximum operational efficiency.
In the words of his spokesman Luke Jensen, in an order of 50 items, Ocado Technology is able to reduce the working time by 1h. 14 min. on average just 15 minutes.
Almost an hour less work. “The online sales model of leading supermarket chains such as Tesco is not profitable, in such a way that if demand increases, costs rise at the same time,” he assured.
With its online sales model, Ocado is able to offer 70,000 references (compared to 25,000 for a standard supermarket in the United Kingdom), which implies the ability to offer differentiating niche products, increasing order sizes and customer satisfaction. Customers, with a service level of 100%, something that Luke Jensen considers impossible if the order is prepared in store. In short, cost reduction and service excellence are the keys to success in digital commerce.
5% SHARE GROWTH
Covid-19 has propelled ecommerce to a new inflection point , becoming one of the top priorities for retailers in order to offer customers a good omnichannel experience.
Specifically, in May, it achieved a 13% share in the United Kingdom , compared to 7% in the same month of 2019. It should be remembered that in pre-Covid Spain, food-based mass consumption online sales did not reach the 2% quota, and there is already talk that they could reach 6%.
The traditional model, based on in-store order picking, requires little investment, but has proven to be unprofitable in the long run.
Aware of the importance of deepening the profitability of digital food commerce, Ocado raised more than 1 billion pounds last June with a view to continuing to drive innovation.
Model Valid for Madrid, Barcelona…
The powerful investments required by this model based on large order preparation centers are perfectly acceptable, in the words of Luke Jensen, in cities such as Madrid or Barcelona. “There will be places where preparation in stores will be necessary,” he acknowledges, despite the lack of profitability.
Taking into account that most of the orders are “weekly purchases”, the great growth of the convenience is verified.
To meet this new demand, Ocado launched Ocado Zoom in London, which promises deliveries in less than an hour via motorcycles at a cost of 5 euros (compared to less than € 2 for a conventional order of more than a hundred euros).
“This is as logical as that in a small store you pay more than in a large one,” he argues.
And what to do with the frescoes , the great pending subject of online commerce? Ocado is committed to the quality and the control of the expiration of the products.
At this point, it is key to gain the trust and credibility of customers: "When people know that the product is of quality, they have no problem buying fresh," he assures. In this sense, Ocado boasts a participation in frescoes higher than the average of the British distribution.
Assuming that digital commerce allows a much richer relationship with the consumer than in the physical store, Ocado offers retailers the possibility of offering manufacturers individualized marketing campaigns, sampling, etc.
At this point, it can be said that 4% of Ocado UK’s sales correspond to the Media department. “Manufacturers are very interested because it is a good opportunity to test products and get to know consumers better,” explains Jensen.
The Next Consumer
How is the consumer who reaches electronic commerce? At this point, technology must be at the service of improving the customer experience.
A key aspect for this professional is the flexibility of ecommerce: “Families want to plan, but harboring the possibility of making a last minute change and adding new products.”
On the other hand, in urban centers there are customers who want their order in half an hour regardless of the price.
In both cases, it is found that the consumer will be increasingly demanding with the quality of service.