Kroger + Ocado Not Equal To Target Or Walmart

Retail
Written By Rick Watson

Kroger continues to test and rollout its partnership with Ocado. I've seen a few things recently.

  • First, it takes them almost 2 years to build a new Ocado facility and each one cost about $55M.

  • These Ocado facilities are not meant to replenish stores. They are built for picking and D2C.

  • One was just completed in Monroe, Ohio outside Cincinnati - a place where they have approximately 150 stores in the regional area already. - This signals to me, they are not going to up fit these stores to be as efficient as a small or medium-format Target store.

  • Also unlike Walmart, they are not investing to install MFC in stores, or invest in real estate to a large degree to greatly expand the capacity of their stores.

  • With this model, they will need to put these Ocado facilities all over America next to their stores?

  • So they are not investing like Target where stores are a node in their network. They are instead putting a completely parallel supply chain path.

  • This will lead to approximately double fulfilment and supply chain costs ultimately, which they will figure out in about 5 years when they change their approach.

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/
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