Friday 17 May 2013

Ocado/Morrisons


And it's not even April Fool's day. Yes, Ocado, a company I love and use because I know they can't make any money out of me and yet provide a good service, are going to sell spare capacity to Morrisons, a shopping experience that you just won't run back to who think people need their amazing product at des res in the Home Counties. Hmm...

In the middle, Waitrose. A store whose brand is such that house prices rise when one opens in the neighbourhood. How Waitrose react will be critical. Ocado seem to have come up with a good plan whereby they have in effect sold their distribution centre that they had no ability to use.

This probably screws Waitrose who have a no compete clause, but by selling the business Ocado will think they have managed around this. The devil will be in whether Waitrose can find a way to get at Ocadao through their delivery management agreement with Morrisons.

Clearly the market thinks Ocado have pulled it off as the share price is up 30% this morning. Indeed, it is a company saver as they had invested in a white elephant that they have managed to sell. However, long term their relationship with Waitrose will end and they still never make any money and lose on every delivery. it's a real dotcom business model, sometimes like Amazon they work in the end of course...

12 comments:

Blue Eyes said...

Great comment re Waitrose. The denizens of riverside Deptford are cock-a-hoop about the upcoming opening of a Waitrose in the new development there. I suppose it's good schools for single people.

I haven't tried Ocado, maybe I should. Sainsbury's online offering is my standard, although they are not so good at short notice deliveries. I might actually *walk* to Tesco tomorrow...!

Blue Eyes said...

By the way, what is the massive exclamation mark sign that appears at the top of the screen all about?

CityUnslicker said...

where is that BE - cant' see it on my IE8 browser?

Et In Ocadio Ego said...

Dumb-ass move by Ocado given that Waitrose have a break clause in their contract for 2017 which will now likely be triggered by flirting with with Morrisons - It's akin to losing a classy good looking wife because you flirted with a cheap northern tart.

Barnacle Bill said...

Firefox user and I can see an great big exclaimation mark inside a warning triangle at the top of this post Mr City-Slicker

Umbongo said...

Yup - only Adblock Plus in Firefox has got rid of it.

Bill Quango MP said...

Same thing . Exclamation mark and triangle. Some google ads nonsense I suppose.

Still, its got rid of those ads for "40 something MILFs in your area need attention!"

{btw - if no one else gets those adverts for mature dating then neither do I.}

Bill Quango MP said...

And- Et In Ocadio Ego.

That was my first thought too. But Morrisons may make up the loss from Waitrose. It might actually be a very good move.
CU,ND and myself have all independently pointed out the flaws with the Ocado model before. In fact it was one of the few where we issued a "Don't go there Sister" Hand in the face advice to potential investors.

But as CU says, this could be a game changer. Morrisons customer base is huge and ready for some offers to get them buying online.

Bill Quango MP said...

And- Et In Ocadio Ego.

That was my first thought too. But Morrisons may make up the loss from Waitrose. It might actually be a very good move.
CU,ND and myself have all independently pointed out the flaws with the Ocado model before. In fact it was one of the few where we issued a "Don't go there Sister" Hand in the face advice to potential investors.

But as CU says, this could be a game changer. Morrisons customer base is huge and ready for some offers to get them buying online.

Et In Ocadio Ego said...

I understand the point that Morrisons is possibily bigger better host to leech off of - I wonder if it will be as profitablilty (?)

Can Ocado grab enough ££ with Morrisons within the next 3 years before the break - alternatively could a divorce come sooner as Waitrose will not want their brand diluted with Morrisons associations.

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