Ocado pumps profits into online growth

Monday, July 8, 2013 - 11:42 by Mike Price

The growth in the number of UK consumers buying their groceries via safe shopping online has helped Ocado to justify recent investments in expanding its distribution network and diversifying its product range.

The International Business Times reports that Ocado made a small loss of  3.8 million in the first half of 2013, in spite of the fact that it saw sales rise by 15.6 per cent during the same period.

This news did lead to a drop in its stock, but shows that Ocado is willing to put more cash into expanding its market share.

It recently announced that it would be partnering with supermarket chain, Morrisons, to help it roll out its own platform for safe shopping online, which is obviously a major commitment.

Ocado chief exec, Time Steiner, also pointed out that customers are now spending more with each shop, as average basket values have risen to almost  115.

With more than three and a half million customers in the UK, Ocado has a strong underlying user base that is helping it to expand, even if it has yet to make significant profits over the course of its 13 year history.

Ocado's operation is still a relative drop in the ocean compared with current market leader, Tesco, which has been offering an e-commerce service to its customers for 17 years and generates annual sales of  2.3 billion.

Second place in the current supermarket e-commerce table belongs to Sainsbury's, which managed to outpace rival Asda last year.

There are few supermarkets that have yet to enter the online fray, although Morrisons was behind the curve in this respect until it inked the deal with Ocado.

There is clearly confidence in the online grocery market ,as these retailers are keen to keep on investing.