Coles brings in Ocado to get serious about online grocery shopping

Coles expects the implementation of Ocado's software and equipment to double its online sales.
Written by Campbell Kwan, Contributor

Coles announced on Tuesday that it has entered into an agreement with British online grocery business Ocado to improve its online grocery delivery services by the end of 2023.

Under the agreement, Coles will use Ocado's end-to-end proprietary software Ocado Smart Platform (OSP) for its website and mobile applications to improve customer experience.

Ocado will also provide Coles with its "last-mile routing management technology", which the British company said will optimise delivery times.

The Australian supermarket giant will also build two multi-temperature, automated fulfilment centres, one in Melbourne and one in Sydney. The centres are expected to be operational in 2023, with Coles estimating that they will be able to handle between AU$500 million to AU$750 million worth of products a year.

The supermarket giant will pay around AU$130 million to AU$140 million to Ocado over the next four years for the installation and maintenance of equipment within the fulfilment centres, as well as the licensing of the OSP software.

This agreement is the fifth major overseas deal in less than 18 months for Ocado, who has also signed deals with Mark and Spencer in the United Kingdom, Kroger Co in the United States, Casino in France, Sobeys in Canada, and ICA Group in Sweden.

According to Coles, the move is expected to double its home delivery capabilities and boost online sales by AU$1 billion. Coles currently has annual sales of approximately AU$40 billion, with its online sales accounting for AU$1 billion of that figure.

Coles Onlines can deliver groceries to over 90 percent of Australian households, has over 1,000 click and collect locations, and offers same day delivery to its customers.

Coles' decision to partner with Ocado follows a slew of similar moves in recent months to bolster its online grocery shopping services. The supermarket giant has already established partnerships with eBay to sell groceries on its local online marketplace, as well as UberEats to trial the delivery of ready-to-eat and ready-to-heat meals, with this new agreement with Ocado being another pivot towards online.

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