Ocado turned its grocery know-how into a platform business

Ocado began as an online grocer, but the more unusual asset was the automation, routing and fulfilment stack under the grocery operation. In May 2018 it announced a Kroger partnership with an initial commitment to build capacity equivalent to 20 customer fulfilment centres in the US.

That deal made the strategic pivot concrete: Ocado would sell the Ocado Smart Platform to retailers instead of relying only on UK grocery growth. The hard part was that platform revenue would arrive only after expensive sites were built and partners learned to operate them.

By 2023 the platform logic was visible. Ocado reported 26 automated sites live, installed partner capacity of more than GBP8B at maturity, Technology Solutions revenue up 44.3% to GBP420.5M on a 52-week basis, and Technology Solutions adjusted EBITDA of GBP15.4M versus a GBP101.5M loss in 2022.

In 2023 Technology Solutions revenue rose 44.3% to GBP420.5M on a 52-week basis and adjusted EBITDA improved from -GBP101.5M to GBP15.4M.

The Kroger agreement gave Ocado an anchor partner big enough to validate the licensing model.

The platform moved Ocado from grocery margin math toward recurring capacity and technology fees.

Partner success became the core operating problem, aligning engineering work with retailers' returns.

If an operating model is hard to copy, the bigger business may be licensing the system rather than owning every store.

Ocado still carried losses at group level in 2023 because the platform required heavy investment, but the decision changed what investors and partners were measuring. The company was no longer just a UK grocer; it was a fulfilment-automation vendor with global retail customers.