Ocado promises expansion this year

Wednesday, March 7, 2012 - 12:00 by Sarah Collinson

Online grocery service, Ocado, has experienced a very positive first quarter of 2012, with a 10.9 per cent rise in sales helping it to predict total revenue of £162.1 million.

This is up from the £142 million it made in the first three months of 2011 and indicates that although times are still tough, more people are willing to turn to safe shopping online for their weekly shop.

Interestingly, the average amount spent by each customer on an order was £115.49, which has actually dropped from the £118.06 which was typical last year.

This means that its growth is due to an increase in orders, which are up by 13.4 per cent, rather than growth in the amount which individuals are spending with Ocado.

Ocado has been able to accelerate its growth in the market for safe shopping online, thanks to offering a greater variety of own brand products, as well as non-perishable items which do not fall under the traditional remit of groceries.

By the end of 2012, analysts predict that Ocado will be taking about 160,000 orders each year. To help tackle this increase, the company has streamlined the operation of its depot in Hatfield so that it can account for a higher capacity of orders.

Of course the UK's online grocery market is going to be shaken up somewhat in the near future, due to the arrival of Morrisons, which will be launching its first e-commerce outlet within the next 12 months or so.

While Ocado's premium brand is not necessarily in direct competition with Morrisons, experts predict that it could also be put under pressure by upper market offerings from Marks and Spencer. This should not prevent Ocado meeting growth expectations this year, but could damage its chances in the long term.