Experts are saying Dobbies five-year deal with Speciality Stores - the general merchandise subsidiary of Ocado Group - will fast-track the chain's online offer.
"Linking up with Ocado looks like a very good move by Dobbies as it enables them to improve their online offer much quicker than if they were trying to develop it themselves," according to mdj2 director Andy Newman.
"It is well documented how difficult Wyevale have found developing a fully transactional site and back-end logistics are one of the biggest challenges when the product range is so diverse. Whilst Dobbies will be paying a premium to partner with Ocado it enables them to move quickly to develop their online offer and grow sales on a national basis."
Dobbies Garden Centres is following Amazon and fashion company Asos by launching a next-day online delivery service. The 34-centre group says it will team up with Speciality Stores to enable customers to order anything sold at its garden centres for delivery to their home.
Dobbies will launch a new online store early next year, serving the whole of the UK, using the technology, software, logistics and expertise employed by Speciality Stores. Online orders will be fulfilled using Speciality Stores' general merchandise warehouse.
Dobbies chairman Andrew Bracey is a former chief financial officer for Ocado and it has been suggested that he could link Dobbies with the company since he took over in 2016. Nicholas Marshall, Dobbies' new chief executive, appointed Marcus Eyles to run Dobbies' online offer this March. The company has long had an online arm based in Reading but Marshall and Bracey believe that area is under-served by garden centres.
The terms of the five-year agreement are not being disclosed. Marshall says 40% of UK retail sales are online but for the £4bn garden market it is only a few per cent. "If we can get to 40% of £4bn, that's £1.6bn online, 10 times our turnover - huge."
The UK's biggest online garden retailer Primrose's Ian Charles questions garden centre's abilities to run their own online offers, and says outsourcing demonstrates this. Wyevale developing its own online offer in-house this year is believed to have cost up to £4m and took several years.
Marshall says the Ocado offer will launch in a few months and will make Dobbies online the best in class to meet the main change in buying habits happening in retail: "We've gone through probably the best online retailer."
Finance and lever online development
Dobbies' move demonstrates how a private equity investor can finance and lever expensive online development and shows how private equity continues to be interested in the garden retail sector.
Newcore bought Yarnton Nurseries for £10.3m last month and Exponent has announced its intent to buy Scotts Miracle-Gro's European and Australian operations for an estimated £160m.
Business Growth Fund invested £4m of growth capital to help Primrose expand in June 2012. At £40m turnover, primrose.co.uk is the UK's largest online garden specialist.
Another leading online garden retail brand, Crocus, was founded in 2000 with £1.5m of seed funding from a consortium of investors that included Lord Rothschild and Henry Kravis of private equity group Kohlberg Kravis Roberts.
Wyevale owner Terra Firma, a private equity investment company, launched its new garden retail online offer earlier this year after a protracted in-house development period.