Ocado: Delivering big results by learning from big data

About Ocado

Ocado is the world’s largest online-only grocery retailer and markets its Ocado Smart Platform sales and logistics system to third-party retailers.

Industries: Retail
Location: United Kingdom

The world’s largest online-only grocery retailer improves operational efficiency and customer care with machine learning powered by Google Cloud Platform.

Google Cloud Results

  • Responds to urgent customer emails 4x faster with machine learning
  • Increases contact center efficiency by 7%, enabling representatives to spend extra time on high-priority tasks
  • Delivers analytics results 80x faster and at 33% lower cost than Ocado’s old data warehouse
  • Reduces Ocado’s IT overhead while providing scalability and flexibility

Data analysis speed increases by 80x

In the United Kingdom, the popularity of online grocery shopping is expected to surge from about 6% of the market today to 9% by 2021, according to market research firm Mintel. One of the pioneers of online-only grocery retailing is Ocado, based in Hatfield, Hertfordshire in the U.K. Since starting commercial deliveries in 2002, the company has grown to 600,000 active customers, 260,000 weekly orders, and £1.39 billion in annual revenue.

Ocado takes supermarket trips out of the equation by enabling shoppers to purchase items online through its convenient web and mobile applications. Items are then picked and packed in automated warehouses and shipped directly to customers in a one-hour time slot of their choosing. Ocado’s delivery punctuality is 95%, order accuracy is 99%, and its service footprint now reaches more than 70% of the U.K. population.

“Google Cloud Platform gives us the flexibility and performance to tackle the large and complex data challenges unique to our business.”

Paul Clarke, Chief Technology Officer, Ocado

The company achieved its success by building in-house almost all the technology and automation that powers its end-to-end e-commerce, fulfillment, and logistics platform. Ocado also developed a new platform, the Ocado Smart Platform (OSP), which offers large brick-and-mortar grocery retailers around the world access to a best-in-class solution for online grocery.

Democratizing machine learning

The shopping journey for online grocery retailing differs significantly from other e-businesses. Customers often buy dozens of products at once, a single household may have multiple buyers using multiple devices, and product shelf life may only be a couple of days.

“We often say that having built an end-to-end platform that can do online grocery scalably and profitably, we can do other forms of online retail; but the reverse does not necessarily follow,” says Paul Clarke, Chief Technology Officer at Ocado. “Google Cloud Platform gives us the flexibility and performance to tackle the large and complex data challenges unique to our business.”

The Ocado business model takes advantage of consumers’ shifting preferences and the links between digital technology and shopping experiences.

“Google Cloud Machine Learning Engine gives us the agility we need. Our developers were able to try out TensorFlow and see firsthand the benefits of machine learning in the cloud.”

Paul Clarke, Chief Technology Officer, Ocado

The company has been building machine learning into its systems for over five years. Until recently, Ocado machine learning applications required specialist data scientists, typically with PhDs in machine learning, who would build these solutions from the ground up. It also required the specialist who set up the system and costly on-premises infrastructure to train and run these systems.

However, working with Google as a private alpha testing site for Google Cloud Machine Learning Engine accelerated its adoption of artificial intelligence (AI).

“We’ve been talking about how the cloud could democratize AI for some time,” says Paul. “Google Cloud Machine Learning Engine gives us the agility we need. Our developers were able to try out TensorFlow and see firsthand the benefits of machine learning in the cloud.”

TensorFlow is an open source software library for machine learning developed by the Google Brain team. Ocado developers, engineers, and data scientists now use TensorFlow for many of their machine learning projects. They deploy the models they build on Google Cloud Machine Learning Engine, which lets them train models faster across servers, desktop computers, and mobile devices through a single application program interface (API). Additionally, Google Cloud Machine Learning Engine integrates easily with the other Google Cloud Platform products used widely at Ocado.

What do customers really want?

One of the first TensorFlow models Ocado created was a machine learning algorithm that tags and categorizes customer emails and then prioritizes them for response. The contact center receives thousands of emails each day and Ocado wanted to automate determining which ones needed to be answered immediately and which ones could wait. For example, a first-time customer expressing their delight in using Ocado doesn’t need to be responded to with the same urgency as a customer who is missing an item from their order or who won’t be home to receive the delivery.

“Enabling agents to respond without having to sort through less-urgent emails improves Ocado’s responsiveness and customer service.”

James Donkin, General Manager, Ocado

“We get a lot of emails from customers saying, ‘Our service was great,’ or ‘The driver was very courteous,’” says James Donkin, General Manager, Ocado. “But when issues like weather or road conditions potentially affect delivery, we often get surges of urgent questions. Enabling agents to respond without having to sort through less-urgent emails improves Ocado’s responsiveness and customer service.”

Using Google Cloud Machine Learning Engine, TensorFlow, and a large data set culled from several years’ worth of manually categorized customer emails, Ocado experimented on which kind of neural network architecture would best prioritize emails. After testing its models, Ocado implemented the highest-performing one and has been able to respond to urgent messages four times faster. The company also discovered that 7% of its emails don’t require a response at all, which means call center representatives now have more time to devote to higher priority messages.

“Without Google Cloud Machine Learning Engine, it would have been a lot harder to succeed on a project like email classification,” says Roland Plaszowski, who has recently managed several big data projects and initiatives at Ocado. “Even if we invested significantly in infrastructure, it would be difficult to manage because of the computational intensity. It’s challenging and expensive to run machine learning projects at the same time without infrastructure that you can scale easily.”

Ocado also uses machine learning to predict customer behavior and improve experiences. By analyzing order data, Ocado makes shopping as frictionless as possible. For example, the ordering system can pre-populate customers’ shopping carts with items they are most likely to purchase, remind customers about items they may have forgotten, and notify them of multi-buy offers they haven’t completed, for example, only buying one of a buy one, get one free offer. Based on machine learning from previous purchase data, the Ocado system can also offer new products that are likely to delight customers.

“You will regularly see items that are more personally relevant to you instead of items that are being promoted more generally,” says James. “I'm a vegetarian, so I’m offered specials for vegetarian products that I normally buy and new ones that I've never bought. I’m also less likely to see things that I'm not interested in.”

Machines and machine learning

Within the Internet of Things (IoT), Ocado is looking to enhance its warehouse robots with machine learning. An integral part of the OSP, thousands of robots continually stream data into Google Cloud Storage and Google BigQuery.

Ocado data scientists apply machine learning to create a type of swarm intelligence that enables warehouse robots to work cooperatively to achieve a common goal. Projects include modules to search robot telemetry data, such as whether a battery pack is operating within standard tolerances or whether firmware has been successfully loaded, and use it to optimize maintenance schedules or detect patterns in wear and tear.

“Another challenge we’re looking at is how to embed machine learning directly into robots so they become smarter in terms of self-testing, exception handling, and error recovery,” says Paul. “This is a challenging combination of IoT, data analytics, and machine learning that we believe Google BigQuery and Google Cloud Machine Learning are particularly well suited to helping Ocado achieve.”

“The old databases just weren’t fast enough. We needed a solution that could scale with the amount of data we generate and how we use it. Google Cloud Storage and Google BigQuery now provide the backbone, from a data point of view, for the Ocado Smart Platform.”

Paul Clarke, Chief Technology Officer, Ocado

Scaling for new business

Scalability is also a major reason behind some of Ocado’s cloud initiatives, including the migration of all its on-premises data to the cloud. Ocado wanted to improve customer experiences, empower business teams with greater insight, and reduce IT overhead, so it consolidated onto Google Cloud Platform.

“The old databases just weren’t fast enough,” says Paul. “We needed a solution that could scale with the amount of data we generate and how we use it. Google Cloud Storage and Google BigQuery now provide the backbone, from a data point of view, for the Ocado Smart Platform.”

Ocado estimates its business, product, and transaction data is approaching two petabytes. Combining customer and supply chain data helps both internal Ocado operations and the company’s ambitions to commercialize OSP.

“When compared with other options for expansion internationally, selling OSP as a managed service lets us turn companies that could have been competitors into customers,” says Paul. “We want to build OSP once and then turn it on for multiple business-to-business customers.”

Each time Ocado adds a new hosting customer to OSP, it will launch a customized instance to fit that customer’s requirements. The capacity and performance of each new OSP instance must be able to scale quickly as the backend platform for established retailers with large numbers of products, customers, and transactions.

Ocado’s first OSP customer, Morrisons, is already benefiting from this first-of-a kind solution. Morrisons is one of the UK’s four largest supermarkets and uses OSP to power its online retail business. Using Google Cloud Platform, Ocado has stored, processed, and analyzed terabytes of Morrisons’ data using a dedicated data lake and Google BigQuery.

In addition to using Google Cloud Platform for OSP, Ocado also adopted it for its own online grocery retail business operation. Ocado originally used the Apache Spark and Apache Hadoop open-source frameworks on Google Compute Engine for its data platform. Moving to Google BigQuery frees Ocado business analysts from the complex query setup and workflows associated with Spark and Hadoop. Plus, it lets Ocado share data analytics with suppliers and partners.

Google BigQuery is well integrated with TensorFlow on Google Cloud Machine Learning Engine and Google Cloud Dataproc, the Apache Spark and Apache Hadoop service that lets Ocado use open source data tools for batch processing, querying, streaming, and machine learning. Google Cloud DataFlow and Google Cloud Dataproc handle cluster management, and provide an easy-to-use framework so developers can spend less time and money on administration and more time on delivering valuable business features.

Switching from Hadoop to Google BigQuery revealed a series of cost and performance improvements. For example, Ocado no longer needed to decide how many instances to bring up in a cluster or wait for the instances to spin up. Google handled everything.

“We simply ran our queries and paid for the resources that we use,” adds Roland. “One big win with Google BigQuery is we don’t have to do maintenance. Best of all, we saw Google BigQuery outperform our Hadoop cluster by over 80 times on our largest dataset, and for only two-thirds the cost.”

About Ocado

Ocado is the world’s largest online-only grocery retailer and markets its Ocado Smart Platform sales and logistics system to third-party retailers.

Industries: Retail
Location: United Kingdom
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