The Ocado Internet shop offers online grocery store experience for people living in the UK territory. Ocado was established in the UK over 16 years ago, and it is now serving over 580 000 customers in the country (Ocado Group 2017). The entire shopping process is conducted online, and Ocado has established its proprietary online technology to be able to respond to the needs of the growing population of customers all over the country. Ocado is different from its main competitors, such as Tesco and Sainsbury’s, as it does not have any stores except for the one online shop. With the growing demand for online grocery shopping, Ocado’s main objectives are to be able to answer to the customers’ needs as quickly and efficiently as possible to drive the attention away from competitors by providing an entirely different shopping experience. The main challenges, thus, lie in the area of supply chain management and digital readiness.
One of the most significant practices that are in place at Ocado is the complete absence of physical stores. The products are delivered from suppliers to the local warehouses and then distributed to customers in the specified delivery time. Such practice decreases the expenses on personnel and lease, thus improving the efficiency of operations. However, this scheme can also provide difficulties, as it requires a thorough approach to the digital aspect of the company’s activity. In the case with Ocado, however, their technological platform is the main source of the company’s value. As noted by Barney (2012), the resource-based view (RBV) can be applied to supply chain management, making effective use of operational tools a significant source of competitive advantage. This is exactly the case with Ocado, whose Smart Platform is at the core of the business. According to Ocado Group (2017), Ocado Smart Platform represents an entirely new solution to operating an online retail business and includes a complete e-commerce fulfilment solution for grocery shopping. The system represents a significant USP, providing various advantages to retailers, such as low operations cost and increased capacity, thus attracting retailers for cooperation. Thus, it can be said that the company demonstrates effective use of digital resources, as well as good management of its complicated supply chain.
Nevertheless, there are still options that the company could utilize to promote digital readiness and thus, the effectiveness of operations. For instance, the use of digital readiness assessment could give the company more information with regards to its digital performance and help to eliminate any issues that could be potentially damaging to the effectiveness of its operations. A good digital readiness assessment includes all areas of business activity, including development and purchasing, production, marketing, and sales operations (KPMG 2016). Therefore, the use of digital readiness assessment will help the company to secure its place in the online grocery market and promote further development through the optimization of online marketing.
All in all, Ocado demonstrates the effective use of digital structures in its work, which is an essential factor for an online shopping company to be efficient. The company also has a well-developed system of operations that reduces cost and promotes effectiveness. A good future strategy for Ocado would not involve any major changes, but continuous monitoring and adjustment of current strategies is advised.
Reference List
Barney, JB 2012, ‘Purchasing, supply chain management and sustained competitive advantage: the relevance of resource-based theory’, Journal of Supply Chain Management, vol. 48, no. 2, pp. 3-6.
Collins, K 2008, Exploring business, Flat World Knowledge, Washington.
Duarte, ALCM, Brito, LAL, Serio, LCD, & Martins, GS 2011, ‘Operational practices and financial performance: an empirical analysis of Brazilian manufacturing companies’, Brazilian Administration Review, vol. 8, no. 4, pp. 395-411.
KPMG 2016, Digital readiness assessment, Web.
McGraw-Hill Education 2012-2016, ‘Practice Operations’, The practice series from McGraw-Hill, Web.
Ocado Group 2017, Who we are, Web.