Grocery giant Ocado dismisses threat of 10-minute delivery startups as it pours $13.8 million into autonomous driving company

  • Ocado’s head of advanced technology Alex Harvey has played down the threat of rapid delivery startups.
  • The grocery logistics firm has poured £10 million into autonomous driving firm Oxbotica.
  • The tech will be used in everything from self-driving vans to “kerb-to-kitchen” robots.
  • See more stories on Insider’s business page.

Grocery tech logistics firm Ocado has insisted that delivery startups promising 10-minute deliveries will pose no long-term competitive risk.

The British company, which is best known for its joint venture with Marks and Spencer, claims the range of apps that offer to either pick up groceries from a local retailer or deliver them from hyperlocal microhubs will falter beyond the pandemic.

European tech investors have bet big that the grocery industry is ripe for disruption with more than $687.5 million invested into the sector last year.

Ocado chief of advanced technology Alex Harvey said there are some “big differences” between the startups and his 20-year old behemoth.

“I think with the lockdowns and COVID-19, it has really enabled these very small startups to thrive,” he said in an interview with Insider.

Harvey added, referring specifically to startups that take a commission from bigger grocers: “But I don’t think they will thrive long-term because they don’t have the kind of long-term proposition that really enables retailers … and they are taking so much margin from retailers there’s nothing left.”

Harvey said the surge in startups trying to muscle into the grocery sector was “great” for Ocado because it “validates the importance of the market”.

“But I don’t think they really pose a long-term, sort of competitive risk for Ocado.”

He was speaking after the company unveiled a £10 million ($13.8 million) investment in self-driving company Oxbotica. The investment was made as part of Oxbotica’s latest Series B funding round, which was led by BP Ventures. It also included strategic investors from the US and the UK. As part of the deal Ocado will take a seat on Oxbotica’s board.

The tie-up will allow the companies to deploy autonomous tech in use cases ranging from self-driving vans to “kerb-to-kitchen” robots.

The companies did not reveal which uses would be addressed first as part of the deal but insisted that it covered a “very large vision”.

Ocado, while often thought of as a grocery company, regards itself as a tech firm. It is listed on the London Stock Exchange with a £16.2 billion ($22 billion) market cap. The firm offers a subscription-based service autonomous logistics platform to international grocers that essentially dramatically improves the efficiencies of their warehouses and online ordering systems. The breakthroughs with Oxbotica will also be offered to international grocers as part of the system. Earlier in the month, US grocer Kroger unveiled its first Ocado-powered warehouse in Ohio.

Paul Newman, the chief technology officer of fellow UK firm Oxbotica, described the deal as a “cracking British tech story”.

“We have agreed to work towards this very large vision of changing the way in which groceries are delivered,” he told Insider.

“From the inception of an order, someone’s idea in their head, to it arriving in their kitchen … if you think of that as the problem space, we’re pairing to bring the best of the best to do that.”

Newman said the pair did not have a “small vision” and that the company’s autonomous tech was not wedded to any particular vehicle, an attribute he said was “very, very powerful”.

When asked about the impacts of increased autonomy on the company’s workforce, Ocado’s Harvey said that the business has often redeployed and retrained people.

Source: Read Full Article