Insights: Kroger’s new partnership allows it to ‘leapfrog’ Walmart and Amazon
Diana Sheehan, VP of retail and shopper insights at Kantar Consulting
The recently announced partnership with Kroger Co. and British online grocer Ocado illustrates a shift in online grocery retailing for both players. And it will give Kroger a head-start in realizing true profitability in online grocery in the United States.
Since 2014, Ocado has been exploring selling its technology and logistics expertise in a service model with an external retailer. The move now seems to have just hit its stride as it has partnered with Sobey, Casino and now Kroger in recent months.
The exclusivity of Kroger’s offer is unique because it keeps that technology out of competitors’ hands trying to get up to speed in the online grocery landscape in the U.S. This is a big win for Ocado — both because of the increased revenue but also the expanded international exposure.
This model — which is a pure-play retailer using its platform as service support — was very successful for Amazon a decade ago. And it could potentially be a similar game-changer for Kroger.
Ocado’s current logistics and technical expertise in supporting online grocery fulfillment in Europe allows Kroger to potentially leapfrog both Walmart and Amazon in this space. Not only does the knowledge make Kroger better positioned to succeed in e-commerce, but Ocado has also illustrated the ability to operate profitably in the e-commerce space, something yet to be realized in the U.S. across any major grocery retailer.