Ocado Zoom, rapid fulfilment, and a new grocery channel in the making

The senior commercial manager of Ocado Zoom, George Dean, has said rapid delivery is becoming a grocery channel in itself within the UK.

He argued it should be considered a separate channel to supermarkets, convenience stores, and online, and he encouraged brands to develop specific strategies for it.

Dean, who was talking at IGD Live, a conference in London for grocers and suppliers, suggested brands looking to gain traction in the space should consider size and shape of packaging to ensure they give themselves a greater chance of prospering in the emerging channel, which tends to rely on smaller vehicles and bikes to fulfil goods.

During the presentation, Dean noted that Ocado Zoom – which currently offers shoppers 60-minute delivery if they are within a 5km radius of its Acton warehouse in west London – is playing in a market that includes Sainsbury’s ChopChop, Waitrose Rapid Delivery, UberEats, Amazon, Just Eat, Co-op, and a range of start-ups.

“You might call it rapid delivery, immediacy, same day, short lead time – we don’t yet have a name for it as a little channel,” he explained, adding that there are plans to expand Ocado Zoom across the UK.

Based on a survey of customers after their first use of the service, which has been operating for the last six months, Dean remarked: “We think the spend is incremental to the category – nearly 15% of people who place an order with us say they simply wouldn’t have done another mission if they hadn’t placed that order.”

Last-mile logistics provider, Stuart, is Ocado Zoom’s delivery partner, and Dean said that its fleet of bikes mopeds and cars meet a weekly target of ensuring 95% of orders are successfully delivered within an hour. Stuart’s technology is integrated into the Zoom app, enabling consumers to track their order from point of purchase to arrival.

All of Zoom’s 10,000 product lines, meanwhile, are sourced from the main Ocado distribution centre in Hatfield and taken to Acton once a day, meaning the service effectively only has one ‘supplier’.

“Potentially we can open up these Zoom sites in really tight urban locations and only have to deal with one delivery a day,” noted Dean, who added that Zoom takes the quantity it wants – not whole cases – allowing for a wide range of SKUs but without the typical depth of holding required by major supermarkets.

He said 55% of Zoom customers said they were topping up between bigger shops.

“This channel is a new way to serve customers in the most convenient way at that time – it’s not a distress purchase,” Dean added, before explaining that chilled desserts is the most successful category when compared to relative performance versus Ocado.com.

Crisps and snacks, and confectionery are also popular via Zoom, but the biggest sellers are fresh vegetables such as cucumbers and avocados.

He acknowledged that the Zoom team continues to “play around” with its delivery price point, which currently ranges between £1.99 and £2.99. Minimum basket spend is £15 to attract those who don’t usually spend £40 a time on online grocery.

“We don’t want to be a high price point that people will only use if they have to or as an emergency service – we want people to use it because they want groceries and because it’s good value.”

Talking more widely about rapid fulfilment in grocery, he added: “I think it’s a really exciting part of the industry and one that is going to grow.”