Ocado Group PLC boss Tim Steiner has said that Ocado would be able to handle Amazon.com, Inc. ’s increasing presence in the online groceries market. Online retail giant, Amazon, launched Amazon Prime Pantry in 2015. It is rumored that they might start offering their services in the UK. Ocado is a reputable online British supermarket, which performed strongly in 2015, with revenue in excess of £1 billion and a 7p increase in share price.
There has been speculation that Amazon may acquire Ocado, but this claim was dismissed by Tim Steiner, saying “Every competitor is a threat. But we are confident we can hold our own with any competitor, including Amazon.” Amazon has been performed exceptionally well in recent years, and they are currently working on a drone delivery service.
Ocado’s shares are currently down more around 8% today. This is not surprising, as Amazon’s (Prime Pantry) expansion in the UK will inevitable hurt Ocado, taking away sales and market share from them. This has unnerved some share holders, and lowered the price of their stock.
Unlike Amazon, Ocado’s primary source of revenue is from the sale of groceries online, so they may need to enter other markets and diversify. A takeover by Amazon is likely to be good news for the shareholders of both Amazon and Ocado, potentially rallying share prices.