It’s a given that sales are at all-time highs for online grocery services. But British company Ocado had a surprising tidbit to share in an update to investors last week.
To process the unprecedented volume of orders, Ocado chief financial officer Duncan Tatton-Brown explained that the company had “reduced complexity” by temporarily making some items unavailable in order to serve more customers. “As an example,” he said, “suspending the delivery of mineral water has allowed us to deliver to 6,000 additional households.”
Ocado has struggled to meet demand for its grocery service since the coronavirus pandemic set in. Tatton-Brown said on May 6 that sales for the current quarter are (so far) up 40% from the same time last year, and that the company is delivering to more households than ever before. Despite that, the virtual store remains closed to new customers, and delivery slots are hard to come by for many existing ones.
The company’s decision to eliminate bottled water from orders is a reminder that efficiency is king in online grocery, and delivering cheap, heavy stuff often doesn’t pay. British tap water is also perfectly safe to drink and disposable plastic bottles are a leading cause of pollution, so there are certainly other benefits to limiting bottled water sales.
In the US, contract workers for online grocery service Instacart have long complained about orders that require them to pack, carry, and transport bulky, heavy items, like bottled water and bags of ice. “Definitely not worth the backache or wear and tear on the vehicle,” an Instacart shopper offered $15.83 to deliver 45 cases of water from retailer Sam’s Club told tech site Ars Technica in November 2018.
In Ocado’s case, efficiency gains have also come from customers placing fewer, bigger orders than they did before. “It’s much quicker to deliver one double-sized order than two half-sized orders,” Tatton-Brown said last week. He added that those orders are still “very hard work” for front-line staff, and that the vans Ocado uses to make its deliveries have weight limits.
“If the weight limit on the vans were slightly different or bigger…yes, we could get some more efficiency,” he said. All the more reason to suspend heavy items like bottled water for the time being.