Morrisons deal “the first of many”, according to Ocado – but not in the UK

By Graeme Burton
09 Apr 2014 View Comments

Ocado's 25-year deal with Morrisons, in which the UK's fourth largest supermarket chain will use Ocado Technology's platform and warehouses to build its own online shopping and delivery network, will be "the first of many", according to Ocado Technology technical director Paul Clarke.

"There won't be other grocery ones in the UK because it's exclusive. But in other territories and in non-food we can do others," said Clarke in an interview with Computing magazine.

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However, the deal with Morrisons precludes any other partnerships with UK supermarkets and precedes a long-planned shift of Ocado's non-warehouse systems to the cloud so that it can be more easily adapted for new clients.

Indeed, when the deal was signed in July 2013, many other major projects were put on hold in order to focus Ocado's technology staff on meeting the January 2014 deadline for the grand opening of Morrisons' online webshop - a deadline it met with 11 minutes to spare, according to Clarke.

"It was one of those projects that most companies would take one look at and say 'that's completely impossible'. That isn't the Ocado way. We love a challenge. That project had a fixed end-date. It had to be live in January this year," said Clarke.

Although Clarke's team had started work in advance of the formal signing, the enormity of the project could not be under-estimated.

"There was a major mountain to climb. Not just software, but new processes, legal issues, the whole way in which two companies would work together. For example, the interweaving of two different companies' logistics operations because, of course, they supply their products.

"It was an enormous project with very tight time-scales and I'm pleased to say that my division and the others at Ocado rose to the challenge and we went live 11 minutes earlier than planned, including the webshop, which went live before Christmas," said Clarke.

The Morrisons deal came straight after the organisation had opened its second mega-warehouse in Dordon (pictured), North Warwickshire, giving staff no time to rest from one big project to another.

"It says something about the culture of the business and the passion of the people to be able to do something like that, and to have done it on the back of just having got Dordon live.

"People were literally coming off the end of an enormous project to get that new warehouse live and the Ocado rollercoaster, instead of going through a quiet period, decided to do a loop-the-loop instead," said Clarke.

The company's software has been developed since it started up 12 years ago, with latter initiatives in warehousing software, robotics and visual systems for robots - all in order to improve the efficiency of Ocado's monolithic warehouse distribution model for online commerce.

Morrisons, meanwhile, cut an expensive deal with Ocado after repeated abortive attempts to establish its own online home shopping saw it write-off at least £27m in costs. It also acquired - and is in the process of divesting - US online childcare retailer Kiddicare for £70m, as well as a 10 per cent stake in New York-based online grocer FreshDirect that cost £32m.

As part of the deal with Ocado, Morrisons paid £170m to acquire Ocado's Dordon warehouse and distribution centre, and will pay a further £46m to expand it. It is also being on-boarded to Ocado's original Hatfield distribution centre to enable it to extend its home delivery network to London and the South East.

Ocado Technology technical director Paul Clarke was talking to Graeme Burton in an exclusive feature for the next issue of Computing.

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