UK web grocer Ocado takes £500k hit after robo-warehouse tech splurge Middle-class Brit online supermarket nirvana Ocado posted losses of £500,000 for 2017, down from £12m profit the previous year – largely thanks to its "transformation" into a technology provider flogging robot-operated warehouses. The company splashed £42.8m on technology last year, up from £34.3m the year before. That …
Does that seem a little steep to anyone else?
Not really. The cost of 100 developers + supporting testers and admin personnel and an office in UK for a year.
If it is a real robotic warehouse and they managed to finish it in 100 man years that is actually quite impressive. The man year numbers for similar projects VW and other places have tried in the past are much, much higher.
The man year numbers for similar projects VW and other places have tried in the past are much, much higher.
Not much of a comparison. I've worked for a German company, anything they do is measured in man-millennia. They over-resource the most basic of projects with legions of senior managers and then all of their trusted oiks, and the outcome is rarely anything like the initial intention. Usually these projects start with a statement of scope, and "X" is specifically and deliberately out of scope, and would you know it, by the end of the project, they've spent millions and the only thing they've got is a rubber-stamped recommendation to deliver "X", which the board then accept. Leading on to another project....
There's some warning signs here. Share price dropped 7% but bounced straight back. Profit margin (EBITDA vs revenue) is only 6%, tenuous. They raised some £1?0m from the share issue because their profit is 'only' £60-80m yearly - why do they need the extra cash so badly? They're also on a historic share price high, performance for the last few years has been 'meh'. And their investor centre stinks of bullshit - lots of 'highlights' but no focus on the balance sheet. I'm no Warren Buffett, but nope.
I think the article hints at the problem: doing near real time delivey of fresh groceries is Nirvana. It's probably cheaper just to pay someone to get your shopping for you.
However, they seem to have identified that they're customers are supermarkets trying to improve their processes and might be developing some good technology along the way.
The numbers aren't good but they're not as bad as they were. If this were America, of course, investors would be piling in…
I heard their lead tech guy doing a talk a while back - he was incredibly arrogant and obsessed by the wifi density they get in their automated warehouses. His view was that anyone not using their tech (or something like it) is finished. It is clever (did seem unnecessarily over-engineered though) but is it transformative for the population? Probably not.
I wonder if their obsession with their tech is driving this approach. Good luck to them, but its a lot of investment in a very limited market and Ocado is not Amazon.
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