Imagine a retail grocery business run by a deep technology estate. No stores, only online deliveries from automated warehouses. Robots in those warehouses pick most items and send them via high-speed conveyor belt to human attendants for packing.
A human-like robotic hand is capable of handling over 50,000 products of all shapes, including delicate items like produce. This process is all monitored by technology that can alert the human attendants to packing errors. Other “collaborative robots” learn from and assist the human warehouse manager. An artificially intelligent warehouse system collects data and optimizes operations. A computer program even maps the best delivery routes for drivers.
This isn’t the grocery store of the future but a description of the present-day operations at Ocado. Ok, the robotic hand is still in development, but the rest is 100% operational.
I’ve recently returned from a UK market tour where colleagues were buzzing about this unique, online-only grocery retailer. They are the world’s largest and their team of technologists and techies has been working to change the way we shop for groceries for the past 16 years.
Amazon Fresh entered the UK market last summer, and many predicted Ocado’s demise. Yet, the retailer has survived, some might even say thrived. Their 2016 sales beat forecasts, rising 14.8% to £1.3B. This momentum has continued in 2017 with both sales and weekly orders increasing despite a sluggish British retail environment.
I have heard of other similar David vs. Goliath success stories. Earlier this year, I wrote about the fact that Amazon is surviving but not thriving in several other markets including China, India, and Mexico.
This most recent example got me thinking again about how and why homegrown retailers are able to give Amazon a run for their money.
In India, Amazon has struggled to win trial and loyalty in face of rival Flipkart’s entrenched awareness and strong seller relationships.
In Mexico, Amazon has fought to build trust in a market where the cultural defaults are cash payments and brick and mortar shopping. Meanwhile, local competitor Mercado Libre has leveraged a nuanced understanding of local culture to hold their own.
In the UK, Ocado’s impressive tech infrastructure is helping them keep Amazon at bay. The Independent calls the company “superlatively innovative” and they likely embody what the grocery category will look like in the age of the 4th Industrial Revolution.
Yet, Ocado has retained a strong compass for human values too. The company is testing delivery via more sustainable electric vehicles. They are partnering with underground urban farms with lower carbon footprints vs. traditional farming. And, they run a ‘Code for Life’ initiative designed to prepare the next generation of workers for the automated workplace.
I don’t want to overstate Ocado’s success. They still have a long road ahead; one that requires them to sustain their growth and license their tech infrastructure to an international grocery partner soon.
Nevertheless, I am heartened to see an innovative player succeed in the face of a powerful incumbent competitor.
Photo Credits: Business Insider, http://read.bi/2qJuvwE