Ocado Andover

Ocado’s facility in Andover uses bots to pick crates of groceries

Eight months ago, Ocado opened the doors to its most technologically advanced facility yet. With robots whizzing around at 4m per second and a sophisticated central communications system, the Andover warehouse demonstrates why Ocado is known as both a tech company and a retailer. But this technological feat is firmly rooted in its retail ambitions. Ocado hopes this fulfilment centre will help it process more deliveries, more rapidly – and potentially help it land a third-party fulfilment deal. It is so confident in the model that it is already building a larger-scale version in Erith, due to open in 2018.

This week, the company allowed analysts into the facility for the first time. So what were the key takeaways from their visit?


The Andover site was built with efficiency in mind. On the floor, products sit inside totes that can be stacked on top of each other (the highest possible stack is 17 totes). Robots move around on an upper-level grid system. When given the command – the central communication system communicates with robots 10 times a second – the droids can reach down and grab the correct tote for a customer order. The totes go to pickers, who manually assemble individual customer orders.

The level of technology in Andover makes picking far faster than at its older sites, where totes move around on conveyor belts. Analysts were clearly impressed with its efficiency. Merrill Lynch highlighted that Andover could pick 200 units per hour compared with 180 per hour in its next most sophisticated site, Dordon. “In our view the primary attraction of this system is that it requires lower capital and results in better efficiency,” it said.

JP Morgan also pointed out that a customer order would now only take five to 10 minutes to pick, as opposed to up to 150 minutes. The analyst hailed the economic case as “promising”.

However, Jefferies argued that fulfilment would still cost around 13% of sales, which suggested “limited improvements on the capital intensity conundrum”.


Ocado is clearly confident in the capabilities of its technology; it has filed patents for more than 50 of its innovations. But do such high levels of automation increase the chances of things going wrong? After all, Ocado has been open about teething problems with the hardware in the testing phase.

JP Morgan doesn’t see a problem; it reported the new system was more resilient than its older versions with “no single points of failure”. Overall, analysts appeared impressed by its technological prowess, with one describing it as “an incredible piece of kit”. Jefferies also said Ocado had “broken new ground on a number of fronts”, including the wireless communication, robot design, and cooling technology for its chilled area.

BNP, however, noted some flaws in the “impressive” system – reporting “frequent ‘pauses’ as the system digested minor gremlins”.


Andover is only at 20 to 25% capacity, having opened just seven months ago. So its potential for future growth is huge. Currently, the site has 260 picking robots; this is expected to rise to over 1,000. It also has the potential to hold 50,000 SKUs versus 30,000 in Dordon. Analysts said this scale could easily be increased further due to the modular nature of the system. Also, it would be relatively easy to add in new technological developments such as its fruit-picking arm, which could potentially replace human pickers once out of testing.

“Andover allows for continuous development and addition of further future automation,” said JP Morgan. “This has the benefits of limited capex spend as Ocado can add components – i.e. robots, pick-up stations etc. – as the business grows.”

Deal potential

The crucial question: as impressive as it is, will Andover attract third parties? CEO Tim Steiner clearly believes the technology could help Ocado land a fulfilment deal (last week’s long-awaited international agreement was for software only) and The Grocer understands it is already showing retailers around the site.

Merrill Lynch was confident the new capabilities would put Ocado “in a better place to sign licensing deals” than it was previously. “The grid model can easily be utilised in a national DC or, alternatively, in a smaller local DC,” it said. “We believe that the technology seen in the Andover CFC should be applicable and attractive for many retailers, particularly in the face of the continued shift to online and few – if any – credible, profitable solutions developed by bricks-and mortar grocers.”

Yet BNP pointed out that partners were unlikely to buy into the full bells-and-whistles solution immediately. “Getting a partner to sign up to the full-scale end-to-end platform (i.e., with distribution centre) on the strength of Andover might be compared with trying to get a marriage proposal on the basis of an online dating profile with a picture taken in bad light. “It is probably better to go on a few dates first and test out some of the software – very much like Ocado’s anonymous new European partner is doing.”