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Deutsche Bank Urges Ocado To Trade In US

Deutsche Bank has said that there could be huge profit potential in the United States for online retailer Ocado, if it decided to begin trading across the Atlantic.

Both SupermarketNews.Com and BusinessInsider.Com recently reported that Ocado's annual UK revenue – which stands at almost £1 billion – could be replicated in the US.

As Deutsche Bank analyst Karen Short said in a briefing note, "[A] forward-thinking grocer would be wise to seize a first-mover advantage in the online space by partnering with Ocado, particularly since the grocery market is moving in this direction.

“For a US-based food retailer looking to launch an e-commerce business, partnering with Ocado has several advantages. First, Ocado would put up a large portion of the capital in exchange for a one-time set-up fee and a commitment of at least three years, which would include variable fees tied to sales. Second, Ocado would handle ongoing maintenance of the equipment, thereby reducing labour and other expenses.

“Third, Ocado would be responsible for integrating all systems and for software updates. Fourth, partnering with Ocado would provide a first-mover advantage, which is especially critical, given the market is likely to shift more toward online in the future.”

Deutsche Bank also observed that Ocado's control of the UK's FMCG market share stands at 12 per cent.

© 2015 European Supermarket Magazine – your source for the latest retail news. Article written by Peter Donnelly.

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