Supply chain ยท 23 November 2017

Selling to Ocado: An online retailer ready to promote new brands

In contrast to regular supermarkets, Ocado has no chain of stores and delivers all produce from its warehouses.
In contrast to regular supermarkets, Ocado has no chain of stores and delivers all produce from its warehouses.

For young food brands looking to gain national distribution, Ocado?s customer base and commitment to new trends makes it an essential partner. Business Advice?s supply chain series returns to help food entrepreneurs understand what it takes to start selling to Ocado.

Since 2000, the online partner of Waitrose has been proving that a supermarket need not commit to the bricks and mortar model, and that an online store can build and maintain a reputation as a trusted source of high quality produce. As Business Advice finds out, its forward-thinking is reflected through its product offering as well as logistics and marketing.?

After not gaining much traction initially with an Ocado buyer, Abakus Foods founder Helen Wang worked hard to improve the packaging and to spread the word about the benefits of jujube fruit ? the superfood berry from the Far East which makes Abakus Foods an ideal proposition for a retailer like Ocado.

Abakus Foods founder Helen Wang
Abakus Foods founder Helen Wang

Wang was then showcasing the business at the Natural & Organic trade show when a buyer came to her stand unexpectedly. ?At that point, we were much better prepared and well positioned to supply them,? she explained.

Having impressed at the show, the Wang was invited to attend one of Ocado?s Meet the Buyer events?? a meeting of buyers and potential suppliers at Ocado?s offices. On the day, brands are given presentations on things like in-store merchandising and logistics, and handed general advice on doing business with Ocado.

But the supplier days aren?t just an informative day out. After the demonstrations, the entrepreneurs are invited to sit down one-on-one with the relevant category buyer to discuss a potential listing.

?I was really nervous going into the meeting,? Wang admitted, ?But the buyer was supportive and it was a friendly conversation. She was great and helped me through the listing process.?

Ocado in numbers

  • Over 50,000 SKUs
  • 94.9 per cent of orders delivered on time
  • Increased active customers by 20 per cent in 2016
  • One per cent of retail revenue spent on marketing
  • 13.1 per cent year-on-year retail revenue growth (August 2017)

Meet the buyer events and trade shows like Natural & Organic?have become useful ways for small brands to establish a presence in the health food industry and meet its key players, and Wang advised other smaller brands to embrace long-term thinking.

?My advice would be that a ?no? is temporary and means ?not right now?. One should work on improving the product in the meantime so you are ready when your time comes.?

Find out how other food brands with a healthy outlook have succeeded in reaching in national retailers:

For some promising young brands, Ocado has taken a more direct approach. Olivia Wollenberg was contacted for a listing opportunity after a buyer had seen her Livia?s Kitchen brand in Selfridges. When it came to negotiations, the buyer was more concerned about product, brand and vision than the numbers.

?This is something which is incredibly important for a small business like I was at that time,? Wollenberg explained.

LiviasKitchen founder Olivia Wollenberg
Livia’s Kitchen founder Olivia Wollenberg

?When you are starting up, you really don?t have that many numbers to go off, and it is much more about someone believing in your dream and your goals for the business. Buyers have to understand that, and the Ocado buyer I first met really did, so I was very lucky.?

Having been selling to Ocado for over two years now, Wollenberg noted a general shift in thinking within retail, as buying teams turn their attentions to emerging trends. She found that Ocado was leading the way in this sense.

?They are incredibly excited about new brands and really want to get behind and support them,? she said. ?The buyers seem to have great insights into what new trends will be, which will work well, and which won?t.?

In terms of logistics, Wollenberg said it was important to Ocado for its suppliers to work with a reliable wholesaler or consolidator which can guarantee products are delivered on time. ?Make sure you are having conversations with these companies before any meetings with Ocado,? she added.

?Also, make sure that you factor in a promotional and marketing budget, as this is hugely important for Ocado and can be a deal breaker. Online retailers have different marketing strategies to in-store supermarkets, so make sure to understand the different options before your meeting so you can understand from the buyer what will work best.?

We found out how the online model at AmazonFresh has benefitted its small suppliers

With more established brands able to bring buyers to them, the majority of wannabe suppliers are competing in a busy environment to even get one foot in the door.

When he launched pork crackling brand Snaffling Pig, founder Nick Coleman?identified Ocado as ?top of our list to win?, recognising the ideal platform for small food brands to gain national distribution. He decided to take a creative approach.

?We found out the buyer?s details by researching them on LinkedIn, guessed their email and wrote to them. They were really supportive and asked us to send in samples and within a couple of months we were listed.?

As with our previous entrepreneurs, Coleman was keen to point out the natural partnership between Ocado and his own high quality snack product. ?Their brand absolutely resonated with ours. Ocado offers their customers access to both mainstreams brands and artisan providers.?

Snaffling Pig founder Nick Coleman left and creative director Andy Allen right with Snaffling Pig investor Nick Jenkins
Founder Nick Coleman (left) and creative director Andy Allen (right) with Snaffling Pig investor Nick Jenkins

Looking again at how Ocado?s online model differs from traditional retailers, Coleman found that the lower quantities at which it buys its products benefitted new suppliers.

?Unlike bricks and mortar supermarkets, you don’t need to prove large rates of sale with Ocado, as it doesn?t buy in such vast quantities. Instead they can buy single cases if they need to. However, you do need to ensure your sales wash their face, as Ocado will have to allocate space within their state of the art warehouse.?

In this sense, achieving the listing was ?the easy part? for Coleman and Snaffling Pig ? the real challenge lies in growing the rate of sales and establishing the brand in Ocado?s online store.

?Winning Ocado is only part of it,? he noted. ?You need to ensure you provide an effective marketing campaign to back up the brand to ensure customers add your products to their baskets.?

What?s clear from the experiences of these three entrepreneurs is that Ocado is a retailer that likes to do things differently. As a technology-driven online store, it prioritises digital marketing, and has the data to allow suppliers to target their customer groups more closely. Ocado is also able to reduce its own risk by purchasing stock frequently in small numbers.

The second strand is its commitment to identifying up and coming trends and putting faith in new brands to drive the store forwards. This same focus on quality and innovation is an outlook food entrepreneurs will be familiar with.

These entrepreneurs have proved there is still a space for innovative food products in Britain?s traditional supermarkets like Waitrose and Sainsbury?s

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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