E-tailing: Daniel Thomas finds that firms in the retail sector are
still in the' trial and error' phase of e-tailing
The Waitrose-backed online grocer Ocado began a full-scale pilot of
its service last week, vowing that "sophisticated technology" will
give it an edge over rivals such as market leader Tesco.com.
Ocado said the first semi-automated picking centre of its kind in
the UK, allied with a strong focus on customer service, will help
it to make a mark on the UK online grocery market, which analyst
firm G2 estimates will be worth £33bn by 2005.
The world's largest ever purpose-built warehouse, in Hatfield,
will, at its peak, process orders to the equivalent of 20 large
supermarkets, said Nigel Robertson, joint managing director of
Ocado.
He said the company, which received £46m from Waitrose parent the
John Lewis Partnership and £20m from investment bank UBS, is
confident in the warehouse model, despite the failure of US online
grocer Webvan and Tesco.com's success with the store-picking
model.
"Unlike Webvan, we have the Waitrose brand and we are on the end of
the Waitrose supply chain so it is not a question of starting from
scratch," he said. "And unlike the supermarkets we are absolutely
focused on the online business."
Ocado has promised to deliver goods within a one-hour time slot and
is working with logistics software provider Descartes to achieve
this.
Descartes is providing its Deliverynet for home delivery and
consumer direct suite, which includes traffic routing and
scheduling software. "During initial trials, we have been easily
within the one-hour mark," said Robertson.
One of the biggest issues for online shoppers is fulfilment, in
particular when goods requested are substituted. Ocado aims to
overcome this with a predictive ordering system that is linked to
stock levels. If a product is out of stock, the consumer will be
informed while they are online.
"We want substitutions to run at less than 5% - considerably less
than the15% regularly experienced with other services," said
Robertson.
The trial initially covers the Hemel Hempstead area. Ocado aims to
cover all of the major urban areas in the UK within the next five
years.