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Ocado to increase IT investment by 77% this year

Anh Nguyen | Feb. 6, 2014
Ocado is planning to increase its IT spend by 77 percent in 2014 to £25 million.

Ocado is planning to increase its IT spend by 77 percent in 2014 to £25 million.

According to the online grocer's 2013 full year preliminary results, its expected capital spend on technology this year will have a focus on people and hardware.

It said: "The primary focus will be on re-platforming of our IT systems to enable the faster replication and rollout for international expansion, the rapid improvement of customer interfaces and other projects to drive efficiency in both our operations and central teams."

The company spent £14.1 million on IT last year, slightly less than in 2012 (£14.4 million). Ocado is investing in its technology platform despite reporting a pre-tax loss of £12.5 million. It is yet to report an annual profit.

In 2013, £10.4 million of the IT spend was on internal development, compared with £11.5 million the previous year. The remaining £3.7 million (compared with £2.9 million in 2012) was spent on computer hardware.

Ocado claims that the 25-year tie-up with Morrisons, to deliver the supermarket's online groceries, validates its operating model. Morrisons.com, based on Ocado's operating services, went live at the start of January. Ocado also provides IT support and R&D to Morrisons under the agreement.

"In addition to the direct benefits to Ocado of this agreement, we consider it a strong validation of Ocado's operating model, providing a unique solution for the challenges faced by grocery retailers worldwide as the online channel continues to increase in importance. It also endorses the commercial value of our IP and operating knowledge, providing a template for future deals.

"Ocado continues to invest in technology by developing its own software for activities which enable us to retain the intellectual property rights," the online grocer said.

In terms of the investment in IT skills, Ocado said in its results statement that it plans to increase its team of developers and other IT staff by 50 percent, from around 350 to about 525 staff, by the end of 2014.

As part of this increase, Ocado began a recruitment campaign in November to attract 100 software engineers. It is still in the process of filling these positions.

Meanwhile, Ocado claims to be "at the forefront" of the mobile shopping, allowing people to place orders via its Apple iOS and Android apps.

"Over 45 percent of all orders delivered are now checked out over a mobile device, with mobile apps accounting for 34 percent of all checkouts," it said.

 

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