The novel coronavirus pandemic has slowed demand for industrial automation in manufacturing, but it has also accelerated change in retail. One example is the growth of microfulfillment centers, which offer efficiencies for e-commerce and groceries. Automation can reduce last-mile delivery costs and provide flexibility for growth, according to Takeoff Technologies Inc.

“We coined the term microfulfillment in 2016,” said José Vicente Aguerrevere, co-founder and CEO of Takeoff Technologies. “We wanted to build a superior automation system to picking, packing, and transportation done by the grocery shopper.”

“The difference between us and hardware players is that we understand the economics of the $5.7 trillion grocery business,” he told The Robot Report. “There’s a picture in our office of our main competitor — a shelf in a supermarket. Self-service was invented 100 years ago. It’s not about over-designing automation but about using the automation required to have a viable and scalable business case.”

Takeoff Technologies helps build microfulfillment market

Unlike the large distribution centers (DCs) located at the fringes of urban areas, microfulfillment centers intensively use robots and software in facilities with a smaller footprint to shorten supply chains. Aguerrevere said his industry experience helped guide Takeoff Technologies.

“I’m a serial entrepreneur and a recovering consultant in the retail vertical, and within that, in groceries,” said Aguerrevere. “I worked for Aldi in emerging economies in Columbia, Mexico, and Venezuela for a decade. Then I joined Harvard Business School, where I met Mick Mountz, founder of Kiva Systems [later acquired by Amazon.com Inc.]. I thought about how to use automation, not to build a better DC but to alter the fundamentals of grocery stores.”

“My co-founder Max Pedró and I discussed whether we should build automation from zero or whether we could use systems that exist and package them in a different way to go to market quickly,” he recalled. “We found existing automation and changed the way it’s assembled and deployed. It’s like a pickup truck — with the right price point, you have speed to market, not in three years, but in three months to installation.”

“Taking the idea from software as a service, we built fulfillment as a service,” Aguerrevere said. “We transformed a project-based industry to a product-based industry, hyperlocally. It’s the same in Sydney as in Paris or New York. What really matters in an innovation market is the ability to scale quickly. We’re deploying to more than 50 facilities worldwide.”

Takeoff Technologies raised $25 million in Series C funding in September 2019, bringing its valuation to $500 million. The World Economic Forum last month recognized the Waltham, Mass.-based startup as a technology pioneer.

End-to-end value and competition in groceries

“On the hardware side, Takeoff has partnered with KNAPP to preassemble facilities to deploy worldwide,” said Aguerrevere. “We provide an end-to-end platform, including a user interface for inventory management, picking, routing, and delivery. Out of our staff of 250, 210 are in product/software development in 22 Scrum teams.”

“Retail customers don’t need to bring anything to the equation, and the WCS [warehouse control system] runs the basics for inventory, which we then integrate with customers’ systems,” he said. “For example, we work with Woolworths, the largest supermarket chain in Australia. We hook up to its supply-chain module and don’t change its way of replenishing a store.”

“An Amazon or a Walmart can buy one robot and deploy it end to end, but our target includes large chains such as Ahold, Carrefour, or Safeway,” Aguerrevere said. “There are $30 billion to $100 billion businesses that can’t do it themselves.”

“We have a lot of respect for Fabric and Attabotics, but we have a very different go to market,” he noted. “Takeoff Technologies is similar to Ocado or AutoStore in that the value resides in end-to-end platforms. Kroger could have bought robots directly, but it went to Ocado. However, Ocado has large, centralized facilities, while we leverage proximity.”

“We also compete with Instacart, which is hyperlocal but not yet automated. We’re both automated and hyperlocal, with pick rates 10 times that of Instacart,” said Aguerrevere. “We’re opening a new microfulfillment center practically every other week across North America, Europe, and Australia. In the U.S., we’re working with Albertsons, Big Y, and Wakefern, as well as many others.”

COVID-19 grows demand for Takeoff Technologies

Most of Takeoff Technologies’ staff works on developing its systems. “Half of our technology team is in Waltham, and others are in Europe, with some in Asia,” said Aguerrevere. “Even before COVID-19, we were remote-first. For software development, it has been entirely seamless. We are hiring and expect to be close to 400 employees by the end of the year.”

The company works with partners on installation and maintenance. “Deploying hardware on site has been different — we used to send people, and now it’s mostly remote,” Aguerrevere said. “Each microfulfillment center has 10 to 15 staffers, provided by the retailers.”

The pandemic has not affected sales, Aguerrevere noted. “We already had contracts in, and there has been a significant increase in order volumes,” he said. “Most of our partners have established online businesses, and customers won’t know that their orders are assembled with automation. We’re just doing it faster, without substitutions, and with 100% visibility, which only benefits satisfaction.”

“You can staff facilities with supermarket employees — the cashiers are the same people working with robots for microfulfillment,” said Aguerrevere. “The pick stations are separated, and you need only a few people per shift, which is very different from Instacart, where there are pickers in each aisle.”

“There is massive pent-up demand for automation,” he said. “With 10,000 facilities worldwide, we want to keep a laser focus on groceries and smaller facilities.”

Robots to change the shopping experience

“The store of the future will be one without shelves,” Aguerrevere predicted. “Not all categories are the same — people need to buy toilet paper and cereal on a regular basis, but they also have the desire to explore. Stores of the future will allow people to interact and get inspiration, and then their orders will be efficiently assembled and delivered by automation.”

“Grocery shopping could be more like going to the Apple Store, with staffers advising on what’s for dinner,” he said. “By decoupling exploration and decision making from fulfillment from the shelf, we can be like Alibaba for grocery with Amazon’s cashier-less retail.”