Battle of the Smart Warehouses!
Part 2
Amazon's acquisition of Whole Foods inspired grocery retailers to explore the e-commerce space. Today, Amazon, Walmart, and Kroger control the online grocery market share in the US. Although Amazon's is the current leader in the e-grocery market, Walmart's massive store footprint and Kroger's technological partnership with Ocado threatens Amazon's position. Ocado's logistics software and robot-powered grocery warehouses expand the industry's notoriously, low-margin profit margins more significantly than Amazon and Walmart's supply chain technology. Consequently, experts predict that Kroger will quickly dominate America's online grocery market.
Ocado's deal with Kroger involves building 20 fully autonomous warehouses to support home delivery orders, click-and-collect orders, as well as deliver items to Kroger's store network. Ocado's Smart Platform uses a cloud-based architecture that allows Ocado's team to continually update and scale their software to Kroger's business framework. In 2017, Ocado partnered with Oxbotica, the autonomous driving software, to deliver groceries using autonomous delivery pods. In early 2019, Ocado augmented its' robotic capabilities by acquiring a minority stake in Karakuri, a startup that automates the preparation of ready-to-eat meals. The company's acquisitions and partnerships have provided Ocado with the resources it needs to develop the world’s best e-grocery platform. Unlike other major grocery retailers, Ocado's patented robotic and artificial intelligence technology allows them to operate profitably in the e-commerce space.
Ocado's fulfillment centers utilize robotics, automation, and machine learning techniques in ways that supersede Amazon and Walmart's warehouse technology. Amazon's robots move about three times slower than those in Ocado's warehouses; thus, Kroger will be able to fill online grocery orders faster than Amazon. Furthermore, Ocado's robotic hand can pick up perishable goods, identify the "ripeness" of that good via smell, then package the good if it aligns with the consumer's preferences - a problem that Amazon has yet to solve. Walmart has yet to establish any automated fulfillment centers. Ocado's warehouses are also less likely to damage groceries and produce food waste compare to Amazon and Walmart. Ocado's technological advantage will allow Kroger to meet the demand for online orders cheaper, faster, and more efficiently than other online grocery competitors.
Amazon's established reputation and Walmart's massive store footprint enables them to compete against Ocado's fully autonomous supply chain. Walmart leads the click-and-collect segment of the grocery industry with more than 2,100 stores capable of fulfilling online orders ready to pick up in store; however, they rely on human employees to fill orders. This business model crowds isles and costs more compared to Ocado's smart platform. Amazon's physical store presence is much smaller compared to both Kroger and Walmart, and as a result, Amazon's e-grocery growth depends primarily on their home delivery services. On the other hand, Kroger can meet a wider variety of e-grocery services compared to Walmart and Amazon because Ocado provides them with a supply chain capable of supporting home delivery and click-and-collect orders.
Ocado's proprietary technology has transformed the e-grocery space, and as a result, experts predict that an increasing number of commercial retailers will outsource supply side software, services and support, and fulfillment hardware to Ocado. Following Ocado's deal with Kroger, Ocado is no longer able to negotiate will other US retailers; thus, Kroger will maintain a technological advantage in the near term. Ocado offers the most advanced automated warehouses and services for grocery retailers, which will generate long term partnerships with a variety of global retailers.
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Written by James Mueller, Edited by Matthew Durborow & Alexander Fleiss