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February 2002
Ocado moves into full launch mode
Following preliminary trials started last autumn, online grocery retailer Ocado has now moved into a full-scale roll-out programme, starting in its local area. In late January its service became available to 100,000 households around the Hemel Hempstead and St Albans areas of Hertfordshire. It is still operating from a 6,505 sq m warehouse at Hemel run by logistics contractor Gist, and says it will not be occupying its purpose-built 37,400 sq m facility at Hatfield until the summer. "We want to go through the learning process first," managing director Nigel Robertson told e.logistics Magazine. The company aims to extend its coverage across London area by area, usually at intervals of two to four weeks. "The key to the roll-out is to achieve sensible densities," he said. 
Deliveries are being offered up to 10pm, seven days a week, in one-hour time slots. The £5 delivery fee is waived on orders of over £75. The company is making strong play of being able to limit "substitutions" to 5 per cent by holding extensive stocks at a single dedicated distribution base. Commenting on rival Asda's recent closure of its two dedicated home delivery picking centres in London (e.logistics Magazine, January), Nigel Robertson said the decision was "not surprising, considering what they had." He added: "I have great respect for them, and their facilities represented a good call when they built them, but the world has moved on." He drew a clear contrast with the Ocado approach, which he said was on a much larger scale. "So it's much easier for us to deal with 'peakiness' and maintain stock availability. Also we're completely focused on home deliveries - they're not an add-on to a retail operation." Ocado has ensured it can serve the whole of London (and points further afield) from a single base by adopting highly-specified Mercedes-Benz delivery vans with removable bodies. The body-swapping facility will come into its own as the company establishes stockless outbases in further-flung parts of London; it will then be able to trunk pre-loaded bodies to them in batches on larger vehicles - possibly overnight. The Ocado warehouse will be replenished by retailer Waitrose, which has a 40 per cent stake in the venture. Some short-life product will be delivered direct. Altogether 10,000 product lines will be offered.
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