Ocado announces annual profit for first time

Thursday, February 5, 2015 - 09:42 by Simon Crisp

Online grocery delivery service, Ocado, has been operating for a decade and a half, but it is only in the past 12 months that it has actually managed to return a profit, according to the Guardian.

The £7 million in profit comes in part thanks to its deals with major supermarkets, including Waitrose and Morrisons, which allow it to service a wide range of customers who place orders online.

Ocado was founded in 2000 and has gradually built its business during a period of major e-commerce growth, although it has proved difficult to actually make any money from delivering groceries to people. A turning point has been reached and Ocado spokesperson, Tim Steiner, said that it is now growing faster than its supermarket competitors.

One of the reasons that Ocado has managed to make a profit in the past year is that rivals like Tesco have been having real issues with their bricks and mortar outlets. They are facing a combination of increased competition from budget outlets, like Aldi, and a generally cautious consumer base which is still not completely convinced that economic stability has returned to the UK.

The £7 million in profit is significant not just because it is the first time that Ocado has achieved this, but also because the company’s revenues were close to £1 billion in 2014. This means that once it does start generating regular profits, the potential size of these figures could be significant.

Just under half a million people used Ocado to buy groceries via safe shopping online last year, with an average e-commerce basket for each totalling over £112. The affluence of its customers and the staying power of its business model could mean that Ocado is a real force to be reckoned with in 2015 and beyond.