John Ibbotson / 5th July 2017
Ocado’s huge set up costs have caused a reoccurring effect on their profits and in the latest set of figures it looks like this is still the case so, how do you solve a problem like Ocado?
“In tech terms, Ocado is at the front of the grocery starting grid but even then its future is not guaranteed.
“While it is no mean feat to increase sales in the current environment, basket sizes are declining, profits are down and the debt mountain continues to grow.
“The Ocado narrative rolls on, namely its revenues from selling groceries aren’t growing fast enough to recoup its astronomical set-up costs.
“Tim Steiner’s purported deal with a regional European retailer, signing it up to use its Smart Platform, isn’t the blockbuster deal that is needed.
“And while conversations with multiple retailers are welcome, shareholders want to see something more concrete.
“Faced with gargantuan debts, Ocado’s greatest hope lies in finding a buyer for its technology. But this seems unlikely as it’s simply too expensive.
“It’s far harder to make online grocery pay when you pit hi-spec customer fulfilment centres and self-driving delivery vans against low-cost warehouses and low-paid humans.
“Arguably Ocado’s greatest weakness has been to be too far ahead of the tech curve.
“Ocado needs a retail giant to buy up its tech or take it over, and soon. No wonder shareholders are demanding a shakeup.