Part 3 analysis and presentation 31 swot analysis

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Part 3: Analysis and Presentation 3.1 SWOT Analysis: Strengths: i. Broad range of products ii. Contract with Waitrose iii. Customer proposition Weaknesses: i. Dependence on UK market ii. Loss making Opportunities: i. UK online retail industry ii. Non food Threats: i. Future acquisitions ii. Competitors iii. Fraud STRENGHTS 9
i. Broad range of products: In addition to its current area of strategic focus, the company intends to investigate growth opportunities by improving the customer offering continually through maintaining and improving the customer experience; increasing its core product range; and continuing to offer value to customers (Annual Report 2009, Ocado limited) . Ocado sells more than 20,000 different products, the vast majority of which are sourced through Waitrose, a leading high quality UK supermarket. Approximately 4,300 of the products sold by Ocado are Waitrose-branded products. Ocado’s product range includes a small but expanding range of Ocado branded products (Ocadogroup.com, Strategic Overview) . Choices of the different range of products enable the customers to buy the products that match their lifestyles and are within their budget. Also the availability of every type of product on one channel increases the chances of sale because customer did not want to go elsewhere if he find everything on one place. It helped consumers to spend less without compromising on choice or quality. ii. Contract with Waitrose: The Company’s reputation is based at least in part on its relationship with Waitrose and its ability to supply Waitrose branded products. If Waitrose ceased to supply the Company with products or if Waitrose were to suffer reputational damage which impacted on the Waitrose brand there could be an adverse effect on the Company’s financial position and future prospects. The Company has a successful symbiotic relationship evolved over 10 years and has recently agreed a new branding and sourcing agreement until 2020. The Company is not dependant on the Waitrose supply chain as 85% of items sold are now sourced directly from suppliers. In May 2010, a new 10 years deal was signed with Waitrose (Annual Report 2009, Ocado Ltd) . There were some rumours about Ocado and its 10 years contract with Waitrose. Previous contract signed for 10 years were with Waitrose was about to end and if this contract will not renewed it can cause big problems for Ocado because in 2010 Ocado is going to listed on London Stock Exchange. But in May 2010 deal with Waitrose was signed for 10 years in which there is a non-competition agreement with Waitrose and with Waitrose likely to extend its delivery services to highly lucrative M25 region. 10
iii. Customer proposition: Ocado offers delivery of grocery products to customers centrally picked from a single, state-of-the-art, highly automated warehouse (the customer fulfilment centre or ‘‘CFC’’) (Ocadogroup.com, Strategic Overview) .

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