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The Ocado's Model

448 Words2 Pages

As discussed, the last mile is a process whereby online grocery enterprises offer at a cost. Although they try to minimize the expenditure in this part of their supply chain, they still incur a specific cost that influences the profit and revenues they obtain from the market. Thus, grocers are going the online route for a price. However, there has been an emergence of 3rd party distributors within the supply chain who have the initiative to handle the picking, packing, payment, and delivery tasks for these grocery entities, but the question remains whether these 3rd party distributors are in a position to absorb all the marketing, logistics, operations, and sourcing costs. Aitken argues out that it is impossible for 3rd distributor entities to succeed in the supply of online groceries due to the massive challenges the sector faces in all fronts (2016). …show more content…

As a 3rd party distributor, Ocado and other companies incur all the cost in the last mile from other online grocery entities. These 3rd party entities claim that they inhibit models that make them inhibit a cost advantage, but this claim is questioned when they are compared to store-based retailers. However, other analysts argue that the Ocado’s model is efficient. Precisely, it has distribution centers that are technology enabled that makes it operate at the lowest cost possible (Aitken, 2016). Additionally, the fact that it offers distribution for several online grocery enterprises makes it distribute its cost across these companies; hence it achieves cost

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