Ocado close to US technology deal

Rumours mount of overdue deal for Ocado Smart Platform with US supermarket chain Publix

Ocado, the high-tech online grocery retailer and home delivery company, is close to a deal that will enable it to sell its warehousing and logistics technology as a package to a US retailer.

According to reports, the company has brought in consultants Mace in advance of the signing of a deal, believed to be with Fort Lauderdale, Florida-based employee-owned supermarket chain Publix.

Ocado's business strategy has long encompassed the idea not just of using its technology to sell groceries to British customers, but to sell that technology outside of the UK to other retailers looking to establish similar online offerings.

A deal is long overdue. In February 2015, the company expected to seal its first deal for the Ocado Smart Platform by the end of the year. However, no deal materialised.

The Ocado Smart Platform is home-grown technology that the company uses to run its customer fulfillment centres and to schedule its deliveries. Chief technology officer Paul Clarke revealed to Computing in 2014 that the company was planning to package and commercialise the software, primarily for overseas markets.

The company has also developed its own warehousing technology, including work on robotics, intended to maximise efficiency.

Ocado has struggled to turn a consistent profit on its core grocery delivery operations under its own brand name. It was effectively rescued when Morrisons tied up a 25-year home delivery deal enabling the number-four UK supermarket chain to establish an online presence after a number of false starts.

However, Morrisons reportedly demanded changes to the 25-year deal, which was signed by previous CEO Dalton Philips. Ocado conceded after Morrisons threatened to refuse to take space at the company's soon-to-be opened warehouse in Erith, near Dartford, and signed a fresh and frozen food supply agreement with online retail giant Amazon to form the basis of its home grocery delivery service.

Publix has 1,115 stores and annual revenues of $32.36bn. It has a deal with US app Shipt to deliver groceries to customers in its core south Florida market. It also has stores in the states of Georgia, North Carolina, South Carolina, Virginia and Alabama. However, the arrangement with has been beset with difficulties.