Robot-run warehouses could help small grocers compete in e-commerce
- Tel Aviv-based CommonSense Robotics, which will begin rolling out micro-grocery fulfillment centers this year, has received "substantial interest" from supermarket retailers, according to Fast Company.
- The company's fulfillment center robots fetch products that are stored in a 3-D cube of racks, then carry the items to a human packer. Commonsense Robotics claimsthis system makes it possible to assemble a 20-item order for a service such as Instacart in just five minutes.
- CommonSense plans to build its warehouses near grocery stores or inside existing retail spaces, which could help grocers save on delivery costs. The system was also created to be price-competitive with traditional, in-store grocery shopping. "We're using a lot less labor, and we're doing it a lot faster," CommonSense Robotics CEO Elram Goren told Fast Company. "It changes the economics of the situation, and that allows retailers to offer faster, cheaper delivery."
On the heels of receiving $6 million in seed money to build a better fulfillment center, CommonSense Robotics seems poised to test its concept in grocery e-commerce. The company's robot-powered, micro-warehouses could be located inside grocery stores if the retailers have enough space, which could help level the playing field between small chains and Amazon, Walmart and other big food retailers ramping up their e-commerce capabilities.
The idea seems to have the ability to cut costs in several ways. Instead of a person going up and down aisles to gather the items in an order, CommonSense Robotics' model will let robots do the picking and a human employee do the packing. This could help small grocers by reducing employee labor and saving them time and money they would otherwise spend to assemble an order.
“In groceries, you have a lot of economies of scale that are working to the benefit of extremely large players,” Goren told Fast Company. “The fact that you can lower the burden of cost on small players that do usually offer a healthier choice, allows them to be more relevant.”
This innovation comes as consumers grow increasingly interested in shopping for groceries online — the average number of e-commerce orders per store increased by 20% in 2017, according to a report from Brick Meets Click. The report also found 85% of orders include a produce item, 66% had a meat/seafood or deli selection and half included a bakery item. With more shoppers becoming comfortable with buying perishables online, e-grocers will need to find ways to pick and deliver orders quickly. A micro-fulfillment center could be one option, especially if it saves on operations and delivery costs.
CommonSense Robotics is just the latest startup infusing technology into what has traditionally been a human-driven process. San Francisco-based Farmstead uses artificial intelligence to determine product sourcing based on customer orders. The newcomer matches local supermarket prices on all of its products, and charges $4.99 for one-hour delivery. The company also launched an "Express Pickup" service option in November, which allows shoppers to get their online orders just thirty minutes after placing them.
Like CommonSense, Farmstead fills orders through a collection of staffed "micro hubs." Shoppers can place their online order, drive to the nearest hub location before pressing an "I'm Here" button on its mobile site. This cues an employee to bring the order to the shopper's car.
For now, Amazon and its e-commerce rivals seem poised to continue their dominance in the online grocery and delivery space. But if more companies such as CommonSense offer a low-cost way for small retailers to get in the game, there could be disruption ahead.