Retailers are increasingly seeking to improve operational efficiency through robots to carry out tasks such as micro-fulfillment operations, inventory management, cleaning, and customer assistance. Pressure to enter the e-commerce market, optimize efficiency, and increase sales drives demand for retail robots. Advancement in sensor technology and retail availability of advanced chips facilitates adoption of these technologies. The Covid-19 pandemic has further fueled adoption of retail robots as a solution for improving in-store sanitation and inventory management with minimal employee contact.
A surge in online retail sales and increased demand for rapid delivery during the pandemic expedited retailers’ adoption of automated micro-fulfillment technology
Demand for retail robots is rising based on reduced staff in most retail areas and the need for contactless services such as sanitization and inventory management.
Brain Corp’s robotic scrubbers’ usage rose 11.5% Year-over-Year (YoY) during the first three quarters of 2020.
Retail giants including Walmart, Kroger, and Tesco have significantly expanded their in-store robotics fleets to improve inventory management with less human contact
The majority of incumbents and disruptors in the retail robotics space provide offerings in inventory management. The micro-fulfillment segment is witnessing increased interest and several companies are entering the market through partnerships with retailers. Incumbents are likely to gain access to technology through acquisition and partnerships as well as development of in-house technology. The majority of disruptors develop proprietary technology in-house.
Among the startups supplying micro-fulfillment centers, Takeoff Technologies has already made strides, forming at least 10 sales partnerships—including three overseas. Fabric is the next most active disruptor in terms of US partnerships with retailers such as FreshDirect. Newer companies such as Ohi have also been able to expand their operations by forming partnerships with companies such as OUAI and Olipop.
On the inventory robotics side, Simbe Robotics (Tally) has gained significant traction through sales partnerships with Schnucks Markets and Decathlon as well as through an agreement with SoftBank Robotics and several other companies to market its products internationally. Bossa Nova Robotics is also a notable inventory robot disruptor due to its partnerships formed with several large scale retailers such as Albertsons. However, its flagship inventory tracking partnership with Walmart was canceled in November 2020.
Fabric, (formerly known as CommonSense Robotics), is a provider of on-demand micro-fulfillment solutions. The company was founded in 2015 in Israel by Shay Cohen, Elram Goren, and Ori Avraham—all who were former high-ranking officers in the Israel Defense Forces, Intelligence Technology unit. Fabric’s micro-fulfillment centers use autonomous mobile robots that operate around the center floor to collect and deliver items for packaging and allows retailers to provide a one-hour delivery service to their online customers. Although the company started off as a robotics venture, it does not offer individual robots. Instead, the primary product is an integrated turnkey solution for online grocers. Fabric owns and operates each turnkey facility, from which it offers fulfillment on a pay-per-order basis. This strategy sets Fabric apart from the competition as they are marketing to small online retailers, while most in the industry target larger retailers only.
Fabric is known for having built the smallest micro-fulfillment center (6,000 sq ft), based entirely on its own in-house technology. Fabric’s latest funding round of Series B USD 110 million February 2020 was announced to be used to expand into the US market. The company is in the process of building 14 sites in the US including a 10,000 sq ft facility in the Washington DC Metro area. In July 2020, The company entered into a partnership with FreshDirect (online grocer) to use the facility once it is up and running. In July 2021, Fabric partnered with Instacart, a provider of grocery delivery and pick-up services, to jointly offer automated order fulfillment services to grocery retailers in North America.
Most retail robotics industry incumbents develop technology in-house or partner with companies that provide related services to obtain and co-develop their technology. Most of these companies already operate as established robotic suppliers focusing on the business-to-business (B2B) market. There are also some retailers—such as Amazon and Ocado—who have developed their own technology, especially in the micro-fulfillment area, while also selling their technology to other retailers. Several incumbents such as FANUC Corporation and Vargo that were already developing robots in related areas such as warehouse robots have recognized the opportunity and entered the micro-fulfillment space.
Amazon Robotics was established in 2012, following Amazon’s acquisition of Kiva Systems. Kiva Systems specialized in the manufacture of mobile robotic fulfillment systems in warehouses and micro-fulfillment centers. Prior to the acquisition, Kiva Systems’ had presence among e-tailers such as Diapers.com and Zappos.com, which Amazon also acquired. Following the acquisition of Kiva, Amazon Robotics acquired several other robotic startups in the fulfillment space, such as Canvas Technology, further improving operational efficiency. Amazon currently does not offer customers fulfillment solutions but uses Kiva Systems’ technology to run its e-commerce fulfillment centers.