Supermarket giant Asda has struck a deal with Ocado for the grocery technology company to take over all home deliveries from next year, as it looks to completely overhaul its online shopping business.

Ocado will “quickly replace and upgrade” Asda’s existing e-commerce structure, taking control of the supermarket’s delivery operations form stores and warehouses from early 2027.

Ocado’s shares rocketed 13.3 per cent in early trading to 236.5p, making it the FTSE 250’s top riser.

Shoppers will be able to make click-and-collect orders, with Asda also able to use the platform to deliver orders made through other apps, including Deliveroo, Just Eat and Uber Eats.

Reversing fortunes

Ocado shareholders are likely to welcome the news of the deal, as the company looks to reverse its fortunes after suffering from several problems in its efforts to upgrade the technology used in grocery delivery.

It has also been plagued by past problematic partnerships, with US supermarket chain Kroger announcing it was closing three warehouses using Ocado’s equipment last November.

Two months later, Ocado confirmed that Canadian chain Sobeys was also closing a facility.

The business now anticipates turning cash flow positive in the second half of 2026, despite having rarely made a profit since it was founded 26 years ago.

The group saw an uptick in activity during the covid lockdown, which led to a surge in online shopping and pushed its stock market value to more than £22bn.

But it failed to keep up this momentum, with its share price collapsing from over £27 to £2.08 before the Asda deal was announced.

Asda welcome the deal

Allan Leighton, Executive Chairman, Asda, said: “We know that continued success in this highly competitive market is dependent on providing a positive experience for customers every time they shop.

Leighton said: “Partnering with Ocado will strengthen our online offer and provide a consistent and high-quality experience for millions of shoppers, from order through to delivery.”

Asda generated more than £21bn in sales in 2025, with 1,100 stores open nationwide, but is looking to revitalise its recent sales weakness under private equity owner TDR Capital and Moshin Issa.

The supermarket chain is searching for ways to see off German discount competitors, Aldi and Lidl, who are increasingly attracting UK shoppers.

Ocado chief executive, Tim Steiner, also said he was “delighted” with the deal, noting that Asda will be able to “benefit from Ocado’s significantly evolved platform”.

He said: “The UK remains one of the world’s most competitive and fast-evolving online grocery markets, where technology, scale and continuous innovation are increasingly important for retailers looking to maintain leadership positions.”