Ocado chief executive sceptical about long term profitability of rapid grocery delivery companies

Ocado chief executive Melanie Smith is not convinced by the business model of rapid grocery delivery companies and “struggles to see the route to profitability” for start-ups such as Getir, Gorillas and GoPuff.

Speaking to The Times, Smith said: “I really struggle to see the route to profitability [for rapid grocery delivery start-up’s] and I have a lot of insight into those economics.”

She added that, by contrast, Ocado’s one hour zoom service can “immediately be profitable.”

READ MORE: Ocado dodges Christmas ‘upset’ with turkey alarm

The last 12 months has seen a dramatic rise in grocery delivery companies, who aim to deliver goods in 15 minutes or less.

The industry has become increasingly competitive, with Getir recently acquiring rival company Weezy, as the market moves towards consolidation.

Ocado’s profit came to £104.1m on revenue of £1.22 billion in Q1 this year, a 58.3 per cent year-over-year rise.

Smith added that her key goal is for Ocado to become the “number one grocer in the UK.”

The grocery retailer is also a proponent of robot technology, used to pick and pack groceries in its micro-fulfilment centres to help maximise the speed and efficiency of its operations.

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