Ocado is ready to fight Amazon
Online grocer Ocado said in a statement on Tuesday that sales jumped 17.3% to £272 million ($419.8 million) in the third quarter, thanks to a 16.6% rise in the average number of orders per week to 190,000.
That's despite a vicious price war amongst supermarkets kickstarted by discounters like Aldi and Lidl. Morrisons, which Ocado delivers groceries for, has been devastated by this battle, with cratering profits and sales.
CEO Tim Steiner says in Tuesday's statement: "We are pleased with the continued steady growth of our business in a retail environment that remains tough."
Ocado reported a 1.1% fall in the average size of orders to £110.46 ($170.50). On a call with journalists, CFO Duncan Tatton-Brown put this down to falling prices.
He said: "This wasn't a change in customers behaviour in the number of items they were buying, it was driven by price and that 's because we're in a pretty competitive environment.
He added that pressure seemed to be easing, saying: "There's been less year-on-year price drops in the last 3 months than there were in the 6 months before that."
He said: "I hear that they've got some plans to launch but I haven't heard much more than that. Frankly we welcome it. Anything that shifts the consumer online in the grocery market is good for us. If the market gets bigger that's good for us."
He added: "There absolutely is a battle plan and that's that we provide the best service to our customers.
"We're competing with some pretty big players now. Tesco is a huge business and is a pretty capable business and has been in online retail for longer than Ocado.
"Amazon have been in this space for 8 years and they're growing quite slowly in the US. I think that just underlines how tough this market is."
Tatton-Brown said Ocado is on track to grow "slightly ahead of the online grocery market" this year and said plans to expand overseas for the first time are still on track.
He said: "We're still targeting to sign on [international expansion] this year. We're talking to multiple partners and those conversations continue."
Ocado shares are up over 4% after 15 minutes of trade in London. The 17% rise in sales was above expectations.
