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Waitrose aims to treble online business after parting ways with Ocado

Waitrose has signed a deal with another technology
Waitrose has signed a deal with another technology company to boost its food sales

Waitrose has unveiled plans to treble the size of its digital business to make £1bn sales online, just three months after its longstanding relationship with Ocado was brought to an end when the online grocer signed a joint venture with rival Marks & Spencer.

The  deal between M&S and Ocado has panicked some Waitrose shoppers and prompted the middle-class grocery favourite to ramp up its plans to boost its own website. Many customers are thought to prefer Ocado because of its better availability and delivery options.

Waitrose said that it had signed a deal with new business Today Development Partners (TDP) to rapidly boost its online business. TDP is led by Ocado co-founder Jonathan Faiman and Mo Gawdat, the former chief business officer of Google X, the Silicon Valley giant's research and development arm.

The food retailer said that it would develop three new state-of-the-art automated distribution centres. It has also moved its current retail director Ben Stimson to a new role of "digital director" to oversee its online growth and improve its customer satisfaction scores.

"Waitrose.com is a popular and efficient home delivery service that is already growing strongly ahead of the market," said Rob Collins, boss of Waitrose. "The plans announced today represent a clear commitment to achieve rapid step change in Waitrose.com’s capacity and capability as we build a modern, well-invested digital business that is fit for the future."

Mr Faiman, who set up Ocado with long-term friend Tim Steiner and Jason Gissing but stepped down as a director in 2010, said that he was more excited about TDP "than anything I’ve done in my career".

"I am delighted and privileged to be back within the John Lewis Partnership family and we will deliver for Waitrose.com customers the world’s best digital home delivery service,” he said.

JLP was one of the early backers of Ocado investing £86m for a 29pc stake in 2001. John Lewis’s pension fund cashed in the last of its 10.4pc stake for £150m in 2011 after 11 years of Ocado losses.

Mr Gawdat, who since leaving Google has become known for engineering an algorithm for happiness, said that he was "aiming to build... the kind of platform that touches everyone's life". 

Waitrose has not given a timeframe for the three new distribution centres that it plans to build with TDP. Its contract with Ocado comes to an end in September 2020 when M&S replaces it. 

Fewer than 10pc of 50,000 products on Ocado's website are Waitrose-own brand but they account for a quarter of the online grocer's sales.

At the time of the M&S and Ocado deal, Mr Collins said that he was confident Waitrose's online business could double in size to be worth 10pc of the grocer's total sales over the next five years.

A poll of shoppers by HSBC analysts revealed that around a quarter of shoppers said they would not use Ocado if Waitrose products were not available. M&S has pledged to replicate Waitrose's most popular lines.

Are you a Waitrose shopper? What do you think of the new online shopping proposal - and will you use it? Tell us in the comments below