Will Ocado be the Amazon of online grocery shopping? Firm holds talks to expand abroad

• Company in talks to license its know-how around the world
• Signs 25-year distribution contract with Morrisons
• Chief executive Time Steiner believers grocers will rent delivery systems

 

Global vision: Tim Steiner, chief executive of Ocado, said the comapny has held talks with global retailers

Ocado has held talks to expand abroad and transform itself into the next big star of the technology industry.The retailer, which has been described as the Amazon of food for its cutting-edge warehousing and delivery system, is in talks to license its know-how around the world. Shares in the Hatfield-based firm, which was started by three former Goldman Sachs bankers 13 years ago, soared 32 per cent as it announced its first new contract since signing a deal with Waitrose in 2000.

In a move that could transform its fortunes, Ocado has signed a 25-year distribution contract with Morrisons which it will operate in tandem with Waitrose.Ocado will provide systems that will become the backbone for the online debut of Britain’s fourth largest grocer. Morrisons will pay to use Ocado’s hi-tech warehouse and delivery system to distribute its products.The chain is fighting to catch up with rivals including Tesco and Asda, who have sold groceries over the internet for years.

Ocado chief executive Tim Steiner told the Mail he think grocers will move from developing their own expensive systems to renting communal versions. He said the Morrisons move is the start of growing the Ocado business into new areas. ‘We have held talks with global retailers who are interested in our systems,’ said Mr Steiner. ‘Wherever you go around the globe experts say the most advanced retail system has been created by Ocado. Businesses from Asia, North America, Europe and Australasia have come to talk to us. They don’t need to reinvent what we’ve done already.’

 Ocado, which has still to turn a profit, has created an automated warehouse filled with robots and conveyor belts and owns the software that powers it.It also has sophisticated technology that routes its vans around the country to avoid peak traffic and road works so that deliveries arrive in time for specific hour slots.

Expanding: Ocado has created an automated warehouse filled with robots and conveyor belts and owns the software that powers it

Ocado’s systems have been compared to American technology giant Amazon, which also uses state-of-the-art technology to cut costs and deliver books and other mainly non-food items efficiently.It too rents out its platform to third parties and provides the backbone for Marks & Spencer’s website. Mr Steiner said: ‘There are many different ways we could utilise our intellectual property. ‘We could just sell it under licence, form a joint venture, or operate our own system in a new territory ourselves.’

Ocado was founded by Mr Steiner, Jason Gissing and Jonathan Faiman in April 2000 and by October had entered into the branding and sourcing arrangement with Waitrose. It started commercial delivery service in January 2002, operating initially in St Albans and Hemel Hempstead. By May 2005 its delivery area expanded to cover more than 10million households.

Unlike rivals, it hires computer experts to work in-house, rather than buy in existing programmes. Projects listed on its website include robots with 3D vision and intelligent machines that can adapt quickly to follow fast-changing instructions. ‘We are continuing to invest millions in our state of the art technology, and to develop software systems and algorithms to solve an array of complex problems,’ the company says on a website dedicated entirely to the company’s science and innovation.