Aeon and Ocado partner in Japan

Date : 29 November 2019

Aeon has partnered Ocado to develop its online grocery business in Japan.

Developing a national fulfillment network

The new partnership will involve Ocado building automated warehouses in Japan. These will be like the ones Ocado has set up in the UK, where robots fill customer orders ready for home delivery. Aeon will launch a new online business using the Ocado Smart Platform, which includes use of the customer fulfilment centres (CFCs) and end-to-end software applications.

Motoya Okada, Aeon’s CEO, said, “We see Ocado as a state-of-the-art, exciting and transformative partner aligned with our strategy of accelerating Aeon's Digital Shift to serve Japan's consumers […] we will actively partner with Ocado to create a smooth, seamless digital experience thereby speeding up our efforts to reform the online customer experience."

Read more from the announcement here.

An increasing number of partnerships in Japan

Businesses are partnering and turning to more innovative solutions to fulfill growing online sales, with demand from the elderly and those who have difficulty getting to physical stores (includes busy professionals).

Rakuten and Seiyu have been testing unmanned ground vehicle-based delivery service, in collaboration with Lawson has trialed food delivery with Uber Eats. The retailer has also partnered with Rakuten for drone deliveries. In 2018, we also saw Walmart’s Seiyu and Rakuten partner to launch Rakuten Seiyu Netsuper, an online grocery delivery service and platform.

While Amazon has partnered with Life supermarket to offer a greater range of fresh food online. This is in addition to Amazon Fresh, which launched in April 2017. Shopper trust and brand perception remain challenges for the retailer. Amazon’s agreement with Life (for Amazon Japan’s Prime Now service) will have helped boost its overall credibility in food and grocery.

Our view

While Japan is one of the world’s largest ecommerce markets, the proportion that accounts for online grocery is relatively small. Very traditional order and fulfilment services such as co-op deli and pal system (a hard copy of a catalogue left at shoppers’ door and then telephone / tick box order and delivery) exist and are still used by some shoppers. 

High delivery and logistical costs in Japan have historically deterred ‘standard’ retailers from fully embracing and pursuing online retailing themselves and this has hindered online grocery development in the market. With demographics and shopping habits changing, however, we are seeing an increasing number of partnerships between pureplay and bricks-and-mortar retailers, maximising the capabilities of one another to better serve shoppers.