E-commerce is often identified as the new way of doing business for the companies in

the modern era. In definition, E-commerce, or other known names “electronic commerce” or

“internet commerce”, means purchasing and selling products or services by the help of

internet. The transaction of money and data is also done through the internet. Recently, it is

possible to see more and more companies entering the e-commerce market to increase their

sales. One of the industry that shifted its focus towards e-commerce is grocery industry.

Many companies in this industry has entered the online channels to sell their products (Lim et

al., 2018). However, due to their market shares in the e-commerce market some companies

have been claimed to have a monopoly. One of these companies is Ocado and according to

the extract the ecommerce has helped Ocado to reach growth in its sales. This essay will

discuss whether Ocado has a monopoly by explaining the factors the influence its power in

the e-commerce industry by defining the concepts of e-commerce and monopoly and

analysing the barriers to entry and exit to the market and conclude by stating that Ocado has a

monopoly in the online grocery.

The concept of e-commerce is often used to describe the sales of physical products

online; however, it is important to note that there is not limit in terms of product in e-

commerce, as any type of commercial transaction enters the borders of e-commerce (Laudon

& Traver, 2016). A monopoly can be defined as a situation in which a company and its range

of products become the dominators of a particular sector o industry. Monopolies often

emerge as a result of “free market capitalism”, which allows a company to grow to a level

that gives the control of the market to that company due to lack of restrictions and restrains to

prevent monopoly (Anderton, 2015). Based on this definition it can be claimed that when

there is not restrictions in the market a company can grow as much as it desires to take the

full control. In the online grocery sector it is possible to create a monopoly as there are no
regulations to stop the companies to take over the market by making the necessary

investments (Kumar , 2019).

There are not enough barriers to enter the online e-commerce grocery sector so any

company that has the capital can actually enter the market however there are many problems

with the operations part of the sector, which makes it difficult to make the decision to enter

the market (Galante et al., 2013). There are still problems with the grocery e-commerce that

is related to the delivery costs. However, Ocado has managed to overcome this issue to

certain level with its outstanding logistics services. This is one of the reasons that makes

Ocado so popular among the consumers and helps it increase its market share. The delivery

cost is certainly a problem that puts off many grocery stores that wish to enter the market.

However, the companies that enter the market in time, like Ocado, benefits from the customer

profile, which consists of families with income that is above average and do no mind the pay

the extra for the delivery for their convenience. For this reason, companies in this market

need to be aware that e-commerce is a premium service and it is not for everyone so they

should rearrange their target customer base (Mason, 2019). Ocado (2020) claims that “As

true pioneers of the online grocery market, we’ve blazed a trail through an

increasingly digital world, both leading and benefiting from the fast-increasing

consumer shift to online shopping. At the heart of it all lies our technological know-

how and unparalleled IP.” They believe that sue to their expertise in the are they hold

a very big portion of the market share. The diagram below demonstrates the future

expectations on online grocery sales in the UK. Considering that the most of these

sales will be made on trustable online channels such as Ocado, it will increase the

market share of the company to a new level.

 Source: (The Marketplace - Ocado Group plc Annual Report 2018, 2020)

In conclusion, Ocado is one of the only companies in the e-commerce grocery industry that

exclusively operates in the online market only. It has created a system that is also followed by

the competitors. It can be claimed from the information on the extract that Ocado is not

simply one of the strong companies in the market, in fact it is the biggest one. It holds the

majority of the market share and it direct the trend in the market so it is possible to suggest

that Ocado has a monopoly in the e-commerce grocery industry.

REFERENCES
1- Anderton, A. 2015. Economics 6th ed. Harlow: Pearson

2- Galante, N., López, E.G. and Monroe, S., 2013. The future of online grocery in

Europe. McKinsey & Company, pp.22-31.

3- Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.

4- Kumar, D., 2019. Monopoly moves on-line: Top e-commerce companies move into

retail. Guardian (Sydney), (1870), p.5.

5- Lim, S.F.W., Jin, X. and Srai, J.S., 2018. Consumer-driven e-commerce. International Journal

of Physical Distribution & Logistics Management.

6- Mason, R., 2019. Developing a Profitable Online Grocery Logistics Business: Exploring

Innovations in Ordering, Fulfilment, and Distribution at Ocado. In Contemporary Operations

and Logistics (pp. 365-383). Palgrave Macmillan, Cham.

7- Ocado Group. 2020. Who We Are. [online] Available at: <https://www.ocadogroup.com/about-

us/who-we-are> [Accessed 8 November 2020].

8- Results18.ocadogroup.com. 2020. The Marketplace - Ocado Group Plc Annual Report 2018.

[online] Available at: <http://results18.ocadogroup.com/strategic-report/the-marketplace>

[Accessed 7 November 2020].