Online retailer Ocado has announced a partnership with Coles to develop its online grocery business in Australia. This is the fifth international partnership for the Ocado Smart Platform in less than 18 months.
Developing Coles’ online business
Coles is one of Australia’s largest grocery retailers, generating sales of AU$39.4bn in 2018. It operates 818 supermarkets across the country. The retailer is already a market leader in online grocery retailing in Australia with its Coles Online business and over AU$1bn of annual sales. Ocado will allow Coles to use its ecommerce platform for grocery and other food distribution related activities in Australia on an exclusive basis. The new deal will see Ocado’s technology and software develop Coles’ online grocery business in Australia.
The two companies will build two automated customer fulfilment centres (CFCs) as part of the deal, one in Sydney and one in Melbourne. Coles will invest up to AU$150m building these CFCs and on upfront costs to Ocado. Coles expects the partnership to approximately double its home delivery capacity.
Through Coles’ new partnership with Ocado, it hopes to better serve its customers in Australia’s larger urban areas through fulfilment from Ocado’s CFCs, while customers in less populated areas will benefit from Ocado’s store-pick software.
The agreement comes as retailers continue to scale up in the online channel to meet the challenge of ecommerce competition, such as Amazon adding grocery to its offer in Australia in October last year.
Ocado’s international expansion
Ocado's role as a provider of retail technology is continuing to gain momentum. The Coles partnership is Ocado’s fifth international deal in less than 18 months, following its partnership with Bon Preu Group in July 2018, Swedish retailer ICA and US retailer Kroger in May 2018, and Canadian retailer Sobeys in January 2018.
The Coles deal follows Ocado’s announcement of a £1.5bn retail joint venture with Marks and Spencer in the UK. More information for subscribers here.
In addition to the Ocado deal, Coles has recently expanded the range available via Uber Eats.
To understand more about how Ocado operates, subscribers can see our insight presentation about its Strategic Outlook.