OCADO: A SUCCESSFUL ONLINE GROCERY BUSINESS MODEL?
In 2009 several companies were competing in the UK for a share of the fast-growing online grocery market, using two different business approaches. Ocado, a purely online grocer operated out of a dedicated distribution center. The company was founded by three former investment bankers in early 2000. By 2009 Ocado had grown from its original three founders to over 3,000 employees and was just about to become profitable. It faced competition from Tesco.com, the biggest online grocer in the world. Tesco, the UK's leading supermarket chain, had started an internet add-on to its regular business and used existing supermarkets to run its online operations. Learning objectives: This case compares Ocado and Tesco.com business models from a consumer proposition, operational efficiency, profitability and sustainability point of view. Participants will be challenged to think about the challenges online grocers face to meet shoppers' expectations, how operational choices impact the consumer proposition and what opportunities both companies have to further grow their business.