The online Grocer Ocado has finally delivered its first annual profit in ten years of trading. The company was founded in 2000 by three former Goldman Sachs bankers in 2000 and is finally cashing in on changing shopping habits as more customers choose to drop the weekly supermarket shop in favour of buying online.
Although the profit is healthy £7 million, this is from revenues of nearly £1bn – in the year to the end of November. Every previous year it has been in the red, recording a £12.5m loss in 2013. Margins are everything in this business and, as a market innovator, Ocado has steadily refined its operations over the years but positioned itself as an up-market supplier of Waitrose products. However it is thought that a deal to sell cheaper Morrisons lines has contributed to the profit.
The number of Ocado shoppers increased by 68,000 over the year to 453,000 and they are big spenders: the average amount spent by customers per online shop was £112.25.
Tim Steiner, one of the founders and the company’s chief executive, said he expected the pace of growth to continue at a similar rate because online shopping would become more efficient, enabling Ocado to cut prices.
“Our early association with Waitrose means we are seen to be an expensive retailer, but we offer outstanding value for people in the UK who can shop like they’re rich but don’t need to be,” he said.
Steiner said Ocado had been able to book a profit because it was pushing more goods through its highly-mechanised distribution centres, making them more efficient. The extra goods are partly the result of the deal with Morrisons.
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