Ocado Bravado On Robo Avocado

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What's going on?

Shares in Ocado jumped more than 20% on Tuesday after the British online grocer announced a long-awaited deal to provide its warehouse technology to a major grocery chain Frances Groupe Casino. Its all part of the battle to digitize grocery shopping

What does this mean?

Ocado started life as an online grocer, initially partnering with Waitrose. But as the big supermarkets entered the delivery market, it became increasingly competitive. Ocado has shifted its focus to developing a warehouse model that eliminates much of the need for human labor. As part of this deal, Ocado will spend 15 million building Casino a warehouse equipped with its technology. The French grocer will also get access to Ocados online grocery software, initially rolling out the system for its Monoprix brand.

Why should I care?

For markets: This is a BIG deal for Ocado as evidenced by the sharp move higher in its stock price.

Ocado has been telling investors for more than a year that it will soon sign a deal like this with a major grocery chain and its finally done so. Ocado will get paid a signing fee and an ongoing payment from Casino, although details of the deals finances werent disclosed. Theres a good chance that Ocado has given Casino a sweetheart deal (i.e. Ocado might not be making much) in order to jumpstart Ocados efforts to partner with established grocers but investors appear satisfied that theres demand for Ocados tech.


The bigger picture: Automating groceries is going to blow up sooner rather than later.

Groceries have been slower to adjust to a digital world than household staples, which are commonplace on Amazon. The practical barriers to grocery delivery are higher: people like to choose their own vegetables, and to be at home when theyre delivered. But this deal is a sign that grocers are well aware that tech (read: Amazon, which just bought Whole Foods) is coming to disrupt their industry and if you cant beat em….

Originally posted as part of the Finimize daily email.

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