Home Delivery – a postscript..
There was an article in the Sunday Times this weekend (here) which reminded me of the home delivery ‘trap’ I wrote of a couple of weeks ago. Ocado has been going for ten years, has never turned a profit (though makes £10m of underlying ‘ebita’), and the owners of the business hope to float the business on the Stock Exchange before it actually makes a profit.
What has clearly kept the business going has been the 3 founders capacity to raise the ever increasing sums of money to keep the business going – were it not for their backgrounds as Goldmans Sachs Bankers, I doubt the business would have survived.
The economics of home delivery are rubbish – even via the dedicated Ocada network. The only way to keep the business going is to know how to raise the cash the business continually demands.
Maybe I am just jealous – if they do get the business to float, they net a cool £130m..
