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Ocado sees increased weekly orders following lockdown

Weekly orders for online grocer Ocado increased in the third quarter of 2020 as customers settle into online shopping behaviour

Clare McDonald
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Published: 16 Sep 2020 13:32

Ocado has seen an increase in weekly online orders in the 13 weeks to 30 August as more people choose to shop online due to the coronavirus outbreak.

The online supermarket stated in its third-quarter results that a combination of increased customer demand, a “phased reopening” of new customer sign-ups and a “normalising of shopping patterns” had led to an increased number of weekly orders.

“These are transformational times for Ocado Retail, with M&S products now exclusively available online at Ocado.com,” said Melanie Smith, Ocado Retail’s chief executive officer. “The successful switchover means M&S products are available to buy in a weekly shop side by side with branded products for the first time. As a result, we can now offer customers more choice and better value than ever before, wider ranges than any traditional retailer, and thousands of products that are only available online through Ocado.com.”

The retailer saw revenues increase by 52% to £587.3m in the third quarter of 2020, compared with £386.4m in the same period last year.

Ocado also saw an increase of average online orders a week from 315,000 in the third quarter of 2019 to 345,000 in the same period in 2020.

Customers were already leaning towards online shopping before the pandemic, but the coronavirus outbreak increasingly forced people online as lockdown restrictions prevented them from carrying out day-to-day tasks elsewhere, accelerating an existing shift in shopping behaviour.

A spike in online shopping led to many retailers struggling to cope in the early days of the coronavirus pandemic, with many seeing a lack of customers visiting stores and difficulties trying to gear up a push into online, while others were overwhelmed by an increase in demand.

At the beginning of the lockdown period, Ocado was forced to pull its website after a huge spike in orders, and chose to boost its technology workers by 300 in the first half of 2020 to cope with increased demand as a result of the pandemic.

Ocado is aiming to increase the number of available online orders by 40% in 2021 to cater to an increased number of customers interested in shopping online.

The Percy Pig effect

On 1 September 2020, M&S products became available for purchase through Ocado’s online store as part of a £750m partnership between the two retailers which saw M&S take a 50% ownership of Ocado’s retail business.

Ocado Group’s third-quarter statement claimed customers had “responded positively” to the switch from Waitrose products to M&S products on the platform, with customers adding more M&S products to the average Ocado basket than they were Waitrose products before the swap, increasing the average basket size by five items.

The online food shopping partnership got off to a rocky start, however, with some customers complaining of cancelled orders and others saying they had to wait a long time for a delivery slot despite being a loyal customer.

In the year leading up to the launch, M&S and Ocado worked together on supply chain logistics and a product database to give customers access to an initial range of 4,400 food products, with more to come, and around 700 other M&S products through the Ocado platform, alongside 50,000 products available through Ocado Retail’s product ranges.

Though the retailer admitted the ongoing coronavirus pandemic would continue to bring uncertainties to the retail sector, Ocado Group said it expected full-year earnings before interest, taxes, depreciation and amortisation (Ebitda) of at least £40m.

Ocado has always had a reputation of being as much a technology company as it is a retailer, constantly trialling new technologies and aiming to disrupt its own model.

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