Amazon interest in Ocado takeover rumour
Ocado, the online supermarket delivery company which trades in partnership with John Lewis’ Waitrose have seen their share price sky rocket following rumours of a take over by Amazon.
A deal would make a lot of sense for Amazon. It would be substantially cheaper to rebrand Ocado and take over their customers, warehouses and fleet, than set up a rival operation from scratch.
Amazon are already making their first foray’s into the supermarket arena with the recent launch of their Amazon Pantry service. However they’re already struggling with consistency of product supply and have obvious gaps in their range.
Ocado have their own issues, having allied themselves with Waitrose they’ve an appeal to what in the past would have been described as the middle classes. An alliance with a second supermarket might widen their customer base, but a take over by Amazon would make half the country potential customers.
Of course Ocado won’t be a total solution for Amazon. Whilst they have a broad coverage, there are swathes of the far flung reaches of the UK to which they don’t deliver (Are you in an Ocado delivery area?). Amazon in comparison prefer to cover the whole country, although they are rolling out services such as Prime Now in major cities.
Since the news Ocado’s share price has subsided a little but is still trading around 7% up.
And who is on the Ocado board? Ex eBay Europe head Doug McCallum…
With all the big boys looking at setting up their own ‘courier’ style business to assist delivery with their own offerings (and 3rd party sellers being forced to use them in future??) there is going to be alot of courier Co’s out there that will have lots of 1/2 full vans running around soon…..
Ocado already run Morrison’s online grocery delivery as well
For a while Amazon included an Ocado leaflet in every order. They did not use location filtering so those of us in regions which are not served still got the adverts.
Home delivery is not a big money maker for the supermarkets so it will be interesting to see how Amazon succeeds- pantry was going after the easy long shelf life ambient products. Fresh is a lot more difficult/expensive to provide which would make an Ocado purchase look appealing.
Would Amazon have their own food range or would the continue the partnership with Waitrose and Morrisons?
It’s no longer really correct to say that Ocado trades in partnership with Waitrose. Waiitrose run their own online service these days.
All that Ocado does is buy some Waitrose products on a wholesale basis. Ocado buys a lot of products directly also. That’s not really a partnership of any depth.
And as an earlier commenter correctly says, Ocado now also provides a branded outsourced delivery service for Morrisons.