Ocado and the future of online grocery fulfilment- what's next?

As I started my technology career at Ocado, I have a great deal of fondness for the company and what I learned there. They recently announced their half year results, and it is a great time to reflect on the future of online grocery fulfilmnet. It's no secret that they've had some disappointments with Kroger and Sobeys scaling back on large central fulfilment centres (CFCs), but they have also had some great recent wins, in part to how they have broadened their product offering. 

Ocado half year results

Where next for the online grocery fulfilment market?

Compared to when I started at Ocado, the market has matured at breakneck speed, and lots of lessons have been learned along the way by all vendors.

Yes, the wild demand forecasts based on 2020-21 have not been realised, but as a share of total grocery sales, online has increased from 7.0%-9.8% in the US from 2019-2025, and from 7.1% to 10.0% in France over the same time period. 

The technology is better, more people are used to it, and grocers are more experienced in how to get what they want.

STIQ's view on the future of online grocery fulfilment

What we've learned:

• Automated online grocery can be done, and done well. Rohlik, Ocado Retail, Picnic, Oda, and others have shown this
  
• The sector is maturing, and there has been a real learning process about what works. Understanding when, where and how to approach things will avoid mistakes
• There are huge regional and national differences in how we shop for groceries (online and offline), which can make international scaling difficult
• Having a laddered approach to automation is becoming standard; we see the demand for modular, scaleable, and flexible solutions across all the sectors we cover, but in grocery it feels particuarly true. How can you utilise existing infrastructure to realise the demand before integrating larger systems?
  

The challenges are real, and often more pronounced due to the large range of SKUs, varied temperature zones, and tight delivery windows for perishable goods. But we believe there is still a lot more to come for online grocery fulfilment.