Ocado (LON:OCDO) reported results for the first half of 2016 on Wednesday, with revenues up by 12.5 percent failing to prevent a significant profit fall.
The group cited increased investment in its technology platform as the reason for the hit to profits, with fell from £7.7 million last year to £1.7 million. Ocado announced this year that it had signed a long-awaited licensing agreement with a European retailer to use its grocery storage and distribution technology, but failed to name names – and it remained quiet on the details in its update on Wednesday.
The group are using the deal to strive to bring their technology to the forefront of the industry. Last week Ocado sent a self-driving truck through the streets of south-east London to test out autonomous deliveries. Although it was only a prototype, it still left a lot to be desired; it only held 8 boxes of food at a time and required two human supervisors.
Ocado shares also suffered earlier this month after analysts reviewed its fully-operational warehouse technology in Andover. Called the Hive, it uses robots to increase efficiency and speed when gathering orders; however, this technology too appears to lack something. Analysts found that the system was running at only 10 per cent capacity, causing shares to plunge 7.9 per cent.
Farida Gibbs, CEO of Gibbs Hybrid Workforce Solutions, commented on Ocado’s efforts:
“Every company is now becoming a technology company, as no business can create, deliver its product or services or engage with customers efficiently without technology. Businesses like Ocado who are making the strategic decision to inject investment into their digital capabilities, need to have board members who have a foundational knowledge of technology in order to steer the business in the right direction. Without adequate technology knowledge, boards will struggle to make informed decisions when considering which new technologies to implement and how to gain business value.”
Farida continues, “The decision of going ahead and directing investment towards Ocado’s autonomous delivery trucks, would require a combination of industry and digital to shape their strategy. Navigating through the digital era requires the board to have sufficient technology knowledge to set the course for the team on the ground. Adopting a digital mind-set starts with the board setting a tone for the rest of the workforce which can filter down through the organisation. Investment in new technology and talent goes hand in hand, as frontline staff need the digital skills to help exploit the full potential of these innovative tools.”
Investors appear to have been given a confidence boost by Wednesday’s results, however, with Ocado shares currently trading up 1.45 percent (1007GMT).