Opportunities and strategies for online grocery in APAC - with Adriano Araujo

After 25 years in senior roles across the global retail and technology sectors, Adriano Araujo joined Ocado Group in 2023 as Ocado’s first President of Asia-Pacific, Middle East and Africa. Adriano supports the senior leadership of some of the region’s biggest grocery retailers as they develop their offerings in the world’s fastest-growing retail channel. 

In an interview marking 1 year since joining Ocado, Adriano shared his thoughts on the major trends in grocery ecommerce across APAC, MEA, as well as insights on how grocers can grasp the opportunity to take and hold market share online as the channel grows.

Joining Ocado Group

Adriano, you’ve got a wide range of experience across traditional grocery and retail technology. What convinced you that Ocado was doing something particularly exciting in the space? ‍

I’ve worked across online grocery for many decades, which has helped me to understand the changing retail landscape in the region, as well as how partnership models in the Asia Pacific operate.

What was clearly unique about this opportunity was the approach of using innovative technology to solve challenges across the grocery value chain. Typically, grocers trying to grow online have focussed mainly on the front of the store to deepen their profits – looking into assortment, promotions, pricing and loyalty. This approach has had limited success in growing customers, and almost no success in improving the underlying economics of the channel. 

Ocado was doing something entirely new, uncovering growth opportunities by focusing on end-to-end efficiency and making the supply chain and ecommerce more productive. This in turn had a big knock on impact for the quality of the customer experience. And it wasn’t just theoretical, Ocado had proved its model at scale in one of the world’s most developed markets. 

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‍How have Ocado’s partners in APAC been developing this year and what are the biggest opportunities on the horizon?

Over the past 12 months, we have reached significant milestones with our existing partners, while also expanding our partner base in the region.

In Japan, we have successfully overseen the launch and early ramp up of our first Customer Fulfilment Centre (CFC) with AEON, and our partnership with AEON has expanded with the recent announcement of our third CFC in the market. Just in the past few weeks we have announced the commencement of operations for our CFCs with Coles in Australia, and they are now in the process of transferring their next-day volumes into the CFCs from their stores in Melbourne and Sydney.

Of course, we always want to bring new markets and new businesses on board too, and I'm really pleased that we signed our first partner in the Middle East, Panda, in February. 

So we are seeing a lot of excitement from our partners, as they continue to scale across their networks, and the benefits of Ocado’s technology when applied to a wide range of markets, including lower labour-cost environments.

With Panda we are rolling out our manual fulfilment solutions across their operations in Saudi Arabia. These solutions, which we call In-Store Fulfilment, are sometimes overlooked when people think about Ocado, but we are already operating the solution in more than 1,000 stores worldwide. We've seen it double the productivity of manual fulfilment in stores. Particularly when you look at some of the markets where we are not present in APAC, there is a big opportunity to broaden the reach of this world-class solution, as well as our automated fulfilment. 

Challenges facing online grocers ‍

Do you think there are specific challenges facing online grocery in APAC and MEA compared to other parts of the world? 

To some extent the core DNA of grocery is similar the world over. You will struggle to find a grocery customer anywhere that doesn’t look for standout choices on freshness, value, and range. 

That said, in terms of provision/supply, grocery tends to be a local game. Even some of the most mature markets are still generally dominated by local, home grown retailers, who really understand the communities they serve.  While there is plenty of variance market to market, some region-wide trends i’d call out are around:

• ‍Competition growth - Most markets in APAC are developing very quickly, and a relatively small number of established grocers are facing more competition than ever before. New players are entering every market, economies are digitising rapidly, and customers are becoming used to a variety of options in how they can access groceries. To stay ahead, grocers need to invest in clear differentiation and building a strong customer proposition.  
• ‍Cold-chain integrity - In hotter climates, it can be more challenging to deliver quality goods at peak freshness. Grocers need to invest in climate control across vans and fulfilment centres to match this expectation.  
• ‍Future-proofing fulfilment - When building fulfilment facilities, grocers need to look ahead, considering how to adapt these sites to account for a variety of environmental and external influences. For example, In Japan our CFCs are being built to withstand seismic environments. Elsewhere in South Korea, we are focusing on the issue of land scarcity, delivering innovative solutions like multi-storey CFCs to fulfil the same number of orders from a smaller footprint.

These challenges, coupled with inflation and the aftermath of covid have made it a tumultuous time for grocers. What have you seen partners or prospects prioritising to get ahead in online grocery? 

The main common denominator we see across all our partners and our prospects is a recognition that investing in the online channel now will be crucial to continuing to dominate the whole consumer spending mix in the years to come. 

Online is back to being the fastest growing channel in grocery across the world, and in a number of markets is already reaching very significant penetration. So established grocers know that there is a lot of market share up for grabs online, and they need a compelling way to serve it profitably, at scale. This requires an openness to new technologies and innovations in logistics.

It’s not just about efficiency at the back-end though. We’re also seeing the best players focus on some key aspects of the customer experience. This includes building personalised ecommerce strategies to win and retain customers, offering a bigger range to cater to wider audiences, and delivering unique webshop experiences to build loyalty.  

Industry trends

In the next 5 years, what do you think will impact the online channel in your region? 

Ecommerce will remain a dominant force over the next 5 years and beyond. Its influence will steadily increase – particularly within grocery – as societies become more digitised and younger shoppers cement themselves as the new key audience. 

Retailers will also start to use this channel more flexibly and experimentally, as they look for additional ways to boost productivity and deepen profits. We may see more creativity in finding new revenue streams (e.g. retail media), in addition to grocers investing more time and effort into building personalised experiences as a form of growing customer engagement. 

Ocado's USPs

‍Since 2019 we have seen huge changes in the online grocery landscape – more pure players, niche offerings and solutions providers. How do you think Ocado stands in this much busier marketplace, and what is the USP?

• ‍Ecommerce: tailored for online grocery - The smarts of our software have been honed from Ocado’s 20+ years’ experience in the online grocery space. Our partners can choose from an array of grocery-specific features, from bespoke storefronts aligned to seasonal marketing campaigns, tailored layouts and themes and hyper-personalised product recommendations.
• ‍An ecosystem of solutions, for every situation - One size doesn’t fit all. We work with our partners to understand their markets and deploy the right fulfilment mix to suit their volumes, strategies and market characteristics. This includes a full range of automated CFCs and leading manual fulfilment options.
• World-leading expertise in operating an online grocery business - Ocado has unique experience of operating an online grocery business in one of the world's most competitive grocery markets, the UK. Today that business remains the fastest growing grocer in that market, and shows what it takes to build a mass-market, profitable online grocery business at scale. We are bringing that expertise and many other lessons from markets across the globe to our partners' operations.

Today, we are helping our partners to accelerate productivity, elevate the shopper experience and unearth hidden efficiencies. I’m looking forward to seeing what the next year brings.

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About Adriano Araujo -

Adriano joins Ocado from one of the world’s leading consumer insights businesses, dunnhumby, where he was President of its Latin American business. Previously he also led dunnhumby’s operations in Asia Pacific, across 9 countries and 200+ employees in the region. Adriano holds an MBA in Strategy and Marketing from the London Business School and a BA in Social Communication and Advertising from the Universidade Catolica in Brazil.