(Bloomberg)—Ocado Group Plc, No. 23 in the Digital Commerce 360 Europe 500, said demand for grocery deliveries during the pandemic is so strong that it has only just begun to address a waiting list of one million potential U.K. customers.
The online retailer said the record demand helped it report a 52% rise in third-quarter revenue. Growth in its retail arm, which started selling food from Marks & Spencer Group Plc this month, should boost full-year earnings to at least 40 million pounds ($51.5 million), it said, ahead of a market consensus of about 26 million pounds.
While Ocado has seen its main growth potential as lying in its technology licensing business, the food delivery arm that’s jointly owned with M&S is driving performance now. That business, Ocado Retail, is benefiting from COVID-wary customers wanting to shop online rather than in supermarkets.
The division switched from selling products from John Lewis Partnership Plc’s Waitrose to those from M&S at the start of the month. Before the pandemic, Ocado had about 800,000 U.K. customers.
In the first two weeks since the launch of M&S products, the average customer basket size increased by about five items, Chief Financial Officer Duncan Tatton-Brown said. Hardly any customers left Ocado, he said, despite previous questions about whether loyal Waitrose shoppers would want to switch to M&S.
M&S non-food products, such as clothing, are also boosting sales, Tatton-Brown added. Ocado Retail is on track to increase capacity by about 40% by next year.
Amazon looks to use more contractors for grocery delivery
The move may reduce the online retail giant’s reliance on employees who are eligible for medical insurance, sick pay and other benefits.
Amazon is encouraging Flex drivers—contractors who make deliveries in their own cars—to try the new program. These people currently drive groceries to customers’ homes, while the products are gathered and bagged in stores by Amazon employees earning at least $15 an hour. The test will require Flex drivers to do the picking and packing, too, according to correspondence reviewed by Bloomberg.
If the program catches on, it could help Amazon control costs by limiting the number of employees who are eligible for benefits. It also gives the company flexibility to adjust to spikes in demand since it can summon more Flex drivers for individual jobs quicker than it can hire and train new employees.
Amazon did not immediately respond to requests for comment. On a website describing the new Shop and Deliver program, the company said it will provide Flex drivers “with a new flexible earnings opportunity.”
Gig-economy jobs have been criticized for low pay and a lack of benefits. But demand for these roles has increased as millions of people lose full-time jobs in the pandemic-fueled recession. Use of ride-hailing apps such as Uber and Lyft is down, which has pushed many drivers to seek work delivering online orders from stores and restaurants.
While the new program appears to be partly designed to limit full-time employees, Amazon also announced plans on Monday to hire 100,000 workers to meet a surge in online shopping tied to the pandemic. Amazon had 876,800 employees at the end of June.