Japanese supermarket operator Aeon is seeking to expand its e-commerce arm by hiring British online grocer Ocado.
Aeon will use Ocado’s technology to set up a new online platform capable of fulfilling national orders to a level of ¥600 billion (US$5.52 billion) in sales by 2030, and ¥1 trillion ($9.13 billion) within the following five years.
The move is a defense effort against rivals in the territory such as Amazon and Walmart-backed Seiyu as the online grocery market appears poised to expand in Japan, according to a Reuters report.
Ocado’s software system is the basis of its £8.1 billion ($10.46 billion) market valuation, despite its meagre 1.4-per-cent share of Britain’s grocery market.
Shagun Sachdeva, consumer insights analyst at GlobalData, says that with Japan emerging as an international leader in e-commerce and boasting one of the fastest-growing and most frictionless online-retail markets across the globe, retailers are increasingly moving away from offline business models towards those that integratesonline sales more closely.
“Japan’s retail industry is set to grow at a compound annual growth rate (CAGR) of 2.6 per cent from US$969.1 billion this year to US$1.10 trillion in 2023. Although, non-store retail forms only 12 per cent of the total retail sales, it grew at a rate of 6.8 per cent in value sales last year, according to GlobalData. At the same time, online retail sales in Japan are projected to grow at a CAGR of 10.1 per cent to reach US$102.4 billion in 2023.”
Sachdeva says the move to partner with Ocado will allow Aeon to leverage Ocado Smart Platform (OSP) and other software, as well as Ocado’s engineering and support services to launch a new online grocery business covering millions of customers across Japan.
“As part of the partnership, Aeon will develop a national fulfilment network to serve the whole of the Japanese market. It will also help Aeon to compete with its rivals such as Walmart Inc’s Japanese supermarket chain Seiyu and Amazon Fresh. On the other hand, the deal will allow Ocado to foray into the Japanese market and leverage Aeon’s longstanding brand presence and product positioning.”