Ocado delivers the goods but Amazon lurks in the deep
Outlook
Ocado’s fans were cheering as it again reported sales ahead of expectations. But its sceptics were still finding plenty to get their teeth into, as the average order size continued to fall and the company failed to deliver on its promises to strike a deal with an overseas retailer.
Future of retailing or high-cost white elephant? The reality is probably somewhere between the two and it’s still anyone’s guess as to whether it ultimately ends up closer to the former or to the latter.
In the meantime, the company has some significant challenges to overcome, not least managing its relationship with an under-new-management Morrisons whose contract with Ocado played a key role in the latter declaring a rare profit last year.
Poor Ocado, that’s the stick that is continually used to beat the business. How its bosses must find themselves gritting their teeth whenever Amazon reports results.
Amazon also struggles to make a profit, and has done for years, and yet its army of investors don’t seem to care. As long as it keeps growing, they’re more or less happy. An expansion beyond the coffee, crisps and booze it currently sells through its grocery arm has long been rumoured as a way of adding to that growth. That is the gorilla in the all the grocers’ mists, and if it ever starts beating its chest in anticipation of taking up the challenge, it won’t be just Ocado that is at risk of ending up as ivory.
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