Ocado partnering with Sweden’s ICA
Online supermarket Ocado has signed a deal with ICA which will see the Swedish retailer use the Ocado smart platform to power its online grocery deliveries.
ICA has around 1,300 stores and a 36% share of the Swedish market.
Per Strömberg, chief executive of ICA Group, said: “We are now laying the foundation for the next generation ecommerce offering, and we are putting an important piece of the puzzle in place to realise our digital ambitions for all of ICA Group. Today we have the industry’s most efficient processes for physical shopping, and through this agreement we can create the most efficient solutions also for ecommerce.”
In an official statement regarding the tie-up with ICA, Ocado said: “Ocado will partner exclusively in Sweden with ICA to launch their end-to-end solution for online grocery services. This will include best-in-class front-end web site functionality, supported by Ocado’s proprietary ‘web shop’ and mobile grocery ordering applications; construction of Ocado’s latest generation, state-of-the-art automated warehouse designed specifically for grocery ecommerce (in which Ocado will invest to install internal infrastructure and robots); and last-mile routing management technology to optimize delivery efficiency, customer service excellence and punctuality.
“In working with ICA, we are adapting our model to suit the needs of a different business model, based on retailer-owned stores, demonstrating the adaptability of the platform. The model will enable the independent retailers to continue to compete, which has been instrumental in making ICA one of the most successful grocery retailers in the world, while delivering the benefits of scale of Ocado’s centralised fulfilment model. The platform is expected to be implemented by the end of 2020.
“ICA and Ocado will develop their first Customer Fulfilment Centre (“CFC”) in the Greater Stockholm area. The build is expected to take approximately three years. ICA will also transition its store-pick based operations to Ocado Smart Platform.
“In addition to this initial CFC, ICA and Ocado will consider developing other CFCs elsewhere in Sweden. Ocado will provide a comprehensive and customized suite of support and engineering services to enable a smooth launch and sustainable ecommerce operations. ICA and Ocado will also partner to incorporate ongoing learning and innovation from Ocado’s global experience into the Swedish business. In consideration of the investments made by Ocado, including maintenance and access to technology, ICA will pay Ocado certain upfront fees upon signing and during the development phase, then ongoing fees linked to both sales achieved and installed capacity within the CFC and service criteria.”
This is the third international tie-up that Ocado has secured over the past six months. In November, the company announced a partnership with France’s Groupe Casino and in January signed a deal with Canada’s Sobeys.
Ocado’s drive to extend its activities beyond its UK base seems to be bearing fruit – and it is also well-timed as the prospective merger between Sainsbury’s and Asda could make life tougher for the other supermarkets.