Kroger Ups Its Online Game by Partnering with Ocado



Kroger announces a strategic alliance with Ocado

The online grocery wars just took an exciting turn as the largest US supermarket chain, Kroger (KR), announced a partnership with the UK e-commerce pure-player Ocado.

As part of the deal, Kroger plans to increase its stake in Ocado by 5% in a subscription rights agreement.

The two companies are already working toward identifying the first three sites for development this year. They plan to identify up to 20 locations over the next three years.

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How does Kroger benefit?

Ocado is among the best in its business. A partnership with Ocado would enhance Kroger’s online abilities, as the UK company offers the Ocado Smart Platform, which includes automated fulfillment (Customer Fulfillment Centers), customer-friendly interfaces for efficient online ordering, and home delivery.

Ocado, in its customer fulfillment centers, uses hundreds of robots to package online orders. Its technology is capable of packing a 50-item grocery order in just a few minutes.

“We are actively creating a seamless digital experience for our customers. Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience – creating value for customers and shareholders alike,” said Rodney McMullen, Kroger’s chairman and CEO.

The move ups Kroger’s game in the online business and positions it well against larger competitors Amazon (AMZN) and Walmart (WMT).

More on Ocado

With total sales of 1.5 billion pounds in fiscal 2017, Ocado is among the few online grocery businesses that are profitable. The company recorded EBITDA of 86 million pounds for the year.


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