Tesco’s recent ecommerce initiative raises questions about its impact on Ocado.
- Tesco launches Transcend Retail Solutions targeting global grocery ecommerce.
- Key partnership formed with New Zealand’s Foodstuffs North Island retailer.
- Different operational models: Tesco’s ‘store pick’ vs Ocado’s ‘dark store’.
- Retailers seek innovative solutions to enhance grocery ecommerce capabilities.
Tesco has recently unveiled a new ecommerce initiative aimed at enhancing the online operations of international supermarket chains. This move is designed to compete with similar initiatives from Ocado, a fellow UK grocer known for its advanced technological solutions in the grocery sector. Transcend Retail Solutions, Tesco’s new venture, assists retailers in fulfilling online orders directly from their stores, marking a new chapter in Tesco’s efforts to expand its technological reach.
The venture’s first partnership comes with Foodstuffs North Island in New Zealand, where Tesco will provide cloud-based software solutions to streamline the process of taking and fulfilling online grocery orders. This partnership highlights Tesco’s ambition to establish itself as a major player in the global grocery ecommerce market. Transcend aims to enhance efficiency by offering store-based picking solutions, setting itself apart from Ocado’s more centralized, automated warehouse approach.
Ocado, traditionally an online grocery retailer, has shifted towards becoming a technology provider. It offers an end-to-end ecommerce platform, leveraging AI, robotics, and automation to aid large retailers worldwide. This strategy has led Ocado to create automated warehouses across different countries, including two recent facilities in Australia as part of a contract with Coles initiated in 2019.
While both companies aim to improve grocery ecommerce outcomes, their approaches differ. Tesco’s approach focuses on enhancing the existing store infrastructure, allowing for a more decentralized method of order fulfillment. In contrast, Ocado emphasizes large-scale warehouse automation, offering an advanced technological package developed more recently. Both solutions ultimately aim to deliver high customer satisfaction, but the choice between them depends on the specific operational needs and geographical conditions of the retailer in question.
The potential of Tesco’s initiative is further supported by the expanding global grocery delivery market, projected to generate £585.46bn ($770bn) annually by year-end. By capturing even a small fraction of this market, Tesco stands to gain significantly. Additionally, with its strong brand and technological solutions, Tesco can present a compelling case to smaller international retailers who may benefit from adopting these innovative store-based picking solutions.
Despite Ocado’s established presence, industry experts believe there is ample opportunity for Tesco to succeed, especially in markets less mature than the UK. In such regions, retailers can greatly benefit from access to advanced technologies and expertise provided by Tesco’s Transcend Retail Solutions. As Tesco continues to innovate and adapt its offerings, it positions itself as both a formidable competitor and a crucial partner for global retailers navigating the growing ecommerce landscape.
Tesco’s Transcend Retail Solutions presents a significant challenge to Ocado, offering diverse solutions to global retailers.
