ASA Adjudication on Ocado Ltd

Ad

A national press ad and an e-mail for Ocado. a. The national press ad featured the headline "Tesco prices. Waitrose quality. Ocado delivery. (We thought you could do with some good news today.)" Smaller text below continued "We'd like to make a little budget announcement of our own. From today, we're matching Tesco prices on all household brands.* That means if you fancy a tub of Häagen-Dazs ice cream, you'll pay exactly the same as you would at Tesco. But if you crave soft, sweet Waitrose strawberries on top, you can have that too, at the same price as Waitrose ... " The asterisk linked to a footnote that stated "*Standard retail prices matched on all identical products at Tesco.com. Does not apply to temporary promotions or special offers. Prices checked 10/03/08 ... ". b. The e-mail featured the subject heading "Ocado matches Tesco prices on branded goods from today." The body copy stated "ocado.com We're matching Tesco on price. Good news for pockets." Next to the body copy, a number of products were featured: Heinz Tomato Ketchup, marmite, Coca Cola, Kellogg's Cornflakes, Ecover biological washing powder, Cif spray, Pampers and a tub of Häagen-Dazs ice cream. The body of the e-mail stated "There'll be plenty of talk about money and prices today. That's why we think it's the perfect occasion to make a little budget announcement of our own. From today, we'll be price matching all our household brands with Tesco.*" The asterisk linked to a footnote that stated "See our Terms & Conditions page for full details."

Issue

Tesco challenged whether the price match claim made in ads (a) and (b) was misleading, because their monitoring had shown that Ocado was more expensive than Tesco for 601 products in a sample of 3,811.

CAP Code (Edition 11)

Response

Ocado explained that they operated exclusively as an online supermarket and, following several months of analysis, decided to adopt a new pricing policy.  Instead of following Waitrose retail prices on all goods, as they had done traditionally, they would follow the retail prices of Tesco.com, which typically had the cheapest prices available from any Tesco stores.  

Ocado said their price match policy applied only to identical goods of equal pack size, flavour and variety, sold in common, which therefore excluded Waitrose and Tesco own-branded products which were only available in their respective stores. They also explained that they had not extrapolated prices.  If the identical product was not sold by Tesco but was available at Waitrose, Ocado said its price followed the Waitrose price.  In the case of identical products being available at Tesco and Ocado, the Tesco price was followed, irrespective of whether that price was cheaper or more expensive than the Waitrose price.  They also pointed out that promotional items were excluded from the policy.

Ocado said their policy was launched on 12 March 2008 and the terms and conditions were set out on their website and were also referenced in their press ads.  Existing customers were notified of the policy by an e-mail, which included a link to the terms and conditions section of the Ocado website.  Ocado provided the ASA with a copy of those terms and conditions, which, they explained, had been amended since the policy launch to ensure that they were as clear as possible for consumers.

Ocado provided details of the methodology they used to compare their prices with those of Tesco.  They explained that they ran a weekly screen comparison of their website and Tesco.com using six postcodes that were representative of Ocado's delivery areas and in close proximity to a large Tesco Extra store; their search areas were set out in their updated terms and conditions.  The search revealed all the products in common and the price at which they were sold.  Ocado's products in common were then amended to match the Tesco price and were uploaded onto the Ocado website, along with the Price Match 'flag' and the date the Tesco price was recorded.  They sent a screenshot to demonstrate how that information appeared on-screen and explained that the 'matched' prices applied until the next price check day when any adjustments were assessed and uploaded onto the Ocado website.  Ocado pointed out that, if Tesco changed their prices the day after the Ocado price check, they would be picked up in the next price match.  Their terms and conditions made that clear and also made clear that prices were checked weekly and that there could be a slight delay before changes to Tesco prices were reflected on their website.  Ocado added that their system allowed them to account for products being added, discontinued or out of stock.  

Ocado explained that on 10 March, two days prior to the launch of the price-match policy, they had gathered the Tesco.com prices for their goods in common, approximately 4,250, and matched those prices in the way described above.  They also carried out manual adjustments on 10 and 11 March.  The prices of approximately 350 products were amended on 11 March and uploaded onto the Ocado site at the end of the day in time for the price-match policy launch.  All matched products for the launch were identified as such on the website, and the date at which the Tesco price match was carried out (10 March 2008 or 11 March 2008, where a subsequent check was made to the product price) was clearly flagged against each matched product.  However, they found that the day after the policy was launched, Tesco had altered the prices of 3,832 products, which affected around 38% of their goods in common.  Ocado said they compared prices again on 17 March and the re-adjusted prices were updated on their website the following day.  They explained that it took a significant amount of time to compare the prices, so daily price matches were not possible, but they believed most consumers thought in terms of a 'weekly' shop, so it was reasonable to compare prices on a weekly basis.  

Ocado reviewed the data submitted by Tesco in support of their complaint and made a number of general observations about the discrepancies cited: a small number of Tesco product descriptions did not match the Ocado product descriptions and it therefore seemed that Tesco had incorrectly compared non-identical products; Tesco excluded their own temporary promotions but incorrectly included Ocado temporary promotions, which were not within the terms of Ocado's price match policy; Ocado added a small number of new products to their site between the 10th and 12th March which would not have shown up in Ocado's 10th March price comparison against Tesco, but would have shown up when Tesco checked the price comparison on 12th March.  Fewer than 200 products were omitted from the 10 March price match for those reasons.

Ocado also explained that not all items were price matched to the same date, because Tesco did not display a product on their website if it was out of stock for the delivery date sought.  They said if they could not find a product on Tesco.com when carrying out the price match, Ocado would retain the price from the previous price match date.  They pointed out that the date of the previous price match was clearly labelled for consumers to see.  Ocado said, if the product did not appear on Tesco.com for a number of weeks, they assumed it had been discontinued and removed it from the price match.  Ocado said Tesco had not taken into account that a number of Ocado products, approximately 300 to 500, were flagged on the website as being price matched to Tesco.com prices of an earlier date.

Ocado said they compared identical products by reference to the EAN number, part of the barcode number that was usually embedded in the image of a product used next to its product description.  The EAN numbers were industry-wide unique product codes but could change over time, meaning that some EAN numbers could become obsolete.  Ocado explained that they missed a large number of items in the early stages of their price-match policy, approximately 400, because Tesco had used obsolete EAN numbers or displayed multiple EAN numbers, by displaying the same image for more than one product.  They believed this problem was now resolved however since they had added the obsolete EAN numbers to their database and the screen comparison would now pick these up.

Ocado said a variable percentage of some grocery products would change price every day and each of those products would be at one price for one part of the calendar day and another price for the remainder.  Ocado explained that the prices matched against Tesco.com on 10 March, at three o'clock in the morning, could therefore have changed before they were loaded onto Ocado's site later that day.  They carried out spot checks in December 2008 and found that between tens and hundreds of prices were affected in that way; for example, on 28 December, 996 products changed price during the day of which 382 were goods in common.  They believed those intra-day price changes could account for a significant number of the products that Tesco believed were missed from the price match.  Ocado said they were considering stamping the time their price matches were carried out to address that.  

Ocado further explained that, since March 2008, they had increased their product range by approximately 200 products per week.  They said Tesco compared products on the Ocado site on a particular date to Tesco prices of an earlier date.   Because Tesco's search of their site would register more products in common at the later date, with the new products added, it would also register more missed price matches when, in fact, those products were not available from Ocado at the time the price match was carried out.  Ocado said they flagged such products with a green "new" flag but added that it was not normally possible to deal with the price comparison until the next price match date.  They took the view that to include them could misleadingly imply that they were available from Ocado at an earlier date than when they actually became available.  Ocado believed consumers would accept that products that did not exist on their website on the date of the most recent price match would fall outside the price match policy until the next price match date.    Further, they believed there was minimal consumer detriment if they waited until the next price match date; the layout of the website was such that they were unlikely to be confused into believing that the Ocado price for the new product was the same as the Tesco price and submitted screen shots in support.  Ocado pointed out that new products were introduced every day and to repeat the price match process, described above, every day, was beyond their resources.

Ocado said not all Tesco stores stocked the same range of products and, in conducting their price comparisons, Tesco had used the full list of products they sold in the UK.  By comparison, Ocado conducted their price match by searching Tesco.com using postcodes that they believed were representative of Ocado's delivery areas and they would not therefore have price matched any products Tesco sold at stores outside Ocado's delivery areas.  They pointed out that this was clearly articulated in their price match terms and conditions and believed the number of products they had failed to match was smaller than Tesco alleged.

Ocado concluded by stating that, since the price match policy was launched in March 2008, customers had identified only 41 products as having been inadvertently omitted from the price match.

Assessment

Upheld

The ASA noted Ocado's comments and evidence.  We also noted the data supplied by Tesco in support of their complaint, which they believed showed that a large number of goods in common were cheaper from Tesco than Ocado in checks they carried out between 10 and 12 March, 17 and 19 March, 7 April and 9 April and 1 May and 8 May 2008.  We understood that Tesco therefore believed that Ocado's price match claims in ads (a) and (b) were misleading.

We accepted that, due to the large number of items that needed to be price matched at any given time, it was reasonable to check prices weekly, rather than on a more frequent basis.  We did not consider that readers would infer from the ads that prices would be compared daily.  We recognised that ad (a) specified in the footnote that prices had been checked on 10 March and that readers were directed to the Ocado website for terms and conditions; we also recognised that ad (b) contained a hyperlink to the terms and conditions, which clarified the date of the most recent comparison.  We noted Ocado's comment that price amendments were made to approximately 350 products on 11 March.  While we noted ad (a) stated that the price match had been carried out on 10 March, we considered that there was no detriment to consumers as, for those 350 products, a more recent price match date was used and the website clearly identified the date of the price match.

We further noted the Ocado website highlighted which items had been matched to Tesco.com prices and the date when the last set of prices had been compared.  We considered that this allowed consumers to know how up-to-date the price comparisons were, an important consideration for consumers who might be deciding whether to shop with Ocado or Tesco.

We noted the more general observations Ocado gave with regard to the apparent discrepancies in the price match data supplied by Tesco, which accounted for less than 200 products.  We noted they believed there were errors such as incorrect product descriptions which led to incorrect comparisons and the inclusion of Ocado's temporary promotions, which should have been discounted from the number of discrepancies.  

We noted Ocado believed some discrepancies arose because Tesco had failed to recognise that a number of Ocado products were flagged on the website as being price matched to Tesco.com prices of an earlier date.  We understood those products had been inexplicably missing from Tesco.com when the latest price match was carried out and Ocado had therefore retained the previous price match price.  We considered that this was a reasonable approach to take, particularly because we understood that it would have been clear to consumers when the product was last price matched.  

We noted Ocado carried out their price match by conducting a comparison of prices of products in common using postcodes for six Tesco.com delivery areas, representative of Ocado delivery areas.  We considered that this was a reasonable approach, because Ocado were price matching against Tesco products available in the same locality.  We understood that the 'scrape' of Tesco's website extracted the unique barcode, or EAN numbers, from the product images.  We noted Ocado believed Tesco had used incorrect or obsolete EAN numbers which had caused a considerably large number of items to be omitted from the price match, particularly in the first two weeks of the policy.  While we recognised the difficulty that posed to Ocado, we considered that it was their responsibility to ensure that all products in common were appropriately price checked.  We noted Ocado believed products would not be missed from the price match in this way in future because they had updated their database to include the obsolete EAN numbers.  We nevertheless understood that they could not be certain of that because it was not inconceivable that incorrect or other obsolete EAN numbers would be used in future.  

We noted Ocado's comments about the time of day when they conducted their scrape of Tesco.com and the reason for this, to minimise disruption to Tesco's server.  We considered, however, that since Ocado carried out their scrape during the early morning of the price match day, Tesco could change their prices during the course of the day for some products, rendering Ocado's price match claim for those products for that day inaccurate.  We noted this could apply to a large number of goods in common.  We were concerned that there was potential for consumers to be misled, because Tesco could actually be cheaper later that day for a large number of products.  We nevertheless considered that Ocado's proposal to include a time stamp would address that problem as consumers would be aware of the exact time Ocado had carried out the price match and realise that Tesco prices could change later that day.

We noted Ocado pointed out that they were adding approximately 200 products to their range every week and those products would not be price matched until the next price match day.  We noted their explanations for why the products were not price matched to Tesco prior to or at the time of their launch on the Ocado site.  We considered however that consumers were likely to expect that, in view of the price match policy, when a new product was introduced to Ocados range, it would be price matched to Tesco.com straightaway.  We considered that the green flag, indicating that a product was 'new' to the Ocado site, did not make clear that the product had not yet been price matched to Tesco.com prices.  We considered that some consumers could wrongly infer that those products were 'new' to Ocado, but not available at Tesco.com.  

We recognised the challenges that operating a robust price match policy could pose and we considered that Ocado had sought to implement the policy in a comprehensive way.  We nevertheless considered that, while a small number of unavoidable discrepancies were to be expected when carrying out a price match policy on this scale, there were factors which meant that they were at risk of failing to price match a large number of items: obsolete or incorrect EAN numbers; the time of day the scrape of Tesco.com was conducted and the introduction of new products not price matched to Tesco.com.  

We concluded that, at the time the ads appeared, because a significant number of products had been omitted, Ocado's price match claim had not been substantiated.

The ads breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness), 18.1 and 18.3 (Comparisons with identified competitors and/or their products).

Action

The ads must not appear again in their current form.  We told Ocado not to make the price match claim again until they had addressed the factors which had caused them to fail to price match a large number of items when the price match policy was launched.  

Adjudication of the ASA Council (Non-broadcast)