December 5, 2018
If you’re like millions of other American shoppers, your Black Friday this year was a breeze. You went online. You searched. You clicked. You typed in your credit card number. Soon, your order arrived at your doorstep.
A decade ago, the ease of this consumer experience would have been unimaginable. That’s also the case from the companies’ point of view: Years ago, few could have foreseen that changing customer expectations would demand the creation of a mind-bogglingly complex logistics infrastructure capable of delivering anything — toothpaste, kayaks, live Christmas trees — to anywhere, within a few days, at the click of a button.
The demands on this infrastructure are only increasing. The U.S. Department of Commerce estimates that e-commerce sales in the third quarter of 2018 totaled $130.9 billion, a 3.1 percent increase over the prior quarter. That’s compared with an overall increase in retail spending of just 0.9 percent during the same period.
Massachusetts roboticists are among those working to help fulfillment centers and warehouse distributors meet that demand. In just a few years, some local robotics startups have gone from an idea to a key part of the e-commerce machine, especially during the peak shopping season: the year-end holidays. For example, supply chain giant DHL — which launched a pilot program with a local robotics startup last year — recently announced it will invest $300 million to add automation to 350 of its warehouses. This early success has prompted hope that the Massachusetts robotics industry could build a long-term future in the e-commerce industry.
“For too long, robotics was either the stuff of sci-fi or the stuff of promises that failed to deliver,” Dan Patt, CEO of Cambridge-based Vecna Robotics, said. “But it’s real now.”
The two local startups that have made the quickest inroads into the e-commerce logistics industry are Waltham-based 6 River Systems and Wilmington-based Locus Robotics. 6 River says its fleet of robots — named “Chuck” after the Charles River — carted more than 1 million items around warehouses in the five days following Thanksgiving. Locus says its similar bots handled 3 million items in November.
Both companies have their origins in Amazon.com Inc.’s (Nasdaq: AMZN) $775 million acquisition of North Reading-based Kiva Systems in 2012, an event that can be considered the Big Bang of warehouse robotics startups in Massachusetts. Two of the three founders of 6 River previously worked at Kiva Systems and continued to work within the division after it was renamed Amazon Robotics in 2014.
Locus, on the other hand, grew out of Devens-based Quiet Logistics Inc., a so-called third-party logistics provider, or “3PL,” for short. Such 3PLs operate the warehouses, distribution centers and transportation routes for retailers that don’t want to build that kind of complicated infrastructure in-house. Prior to 2012, Quiet Logistics had been a customer of Kiva Systems. But like the rest of the warehouse logistics industry, Quiet was left in the lurch when Amazon decided to stop selling its robots to outsiders, instead focusing on building enough supply for its own sprawling network of warehouses. So Quiet started developing its own robots. It spun out Locus as a separate startup in 2016.
Amazon, of course, is the driving force behind most of the complications that retailers and 3PLs are trying to solve with robots. Even though the company’s $177.8 billion in revenue in 2017 represented just 3.5 percent of overall retail spending in the U.S., Amazon’s relentless focus on expanding its inventory and shortening delivery times has forced the entire industry to scramble to keep up.
And Amazon has certainly gotten bang for its buck when it comes to the Kiva Systems acquisition. Kiva’s technology has been crucial in allowing Amazon to reach its current level of scale and efficiency. Amazon drastically expanded the number of robotic installations in 2017, doubling its fleet with the addition of about 50,000 new robots. Market researcher CB Insights estimates the robotic systems have helped Amazon cut fulfillment center operating expenses by 20 percent.
But Locus and 6 River have recognized that not all warehouse operators have the resources or the time to rebuild their facilities from the ground up to accommodate a system like Kiva. So instead, the companies are pioneering a lightweight model that makes it as quick and easy as possible for warehouses to automate some of their work. Unlike Kiva’s system, robots from both Locus and 6 River are designed to work alongside humans as they roam large fulfillment centers. The companies’ software allows the machines to navigate indoor spaces autonomously and also optimizes routes based on the location of the products being packed.
“We’re effectively surrounding you with work, as opposed to you walking up and down and up and down,” Locus CEO Rick Faulk said. Both companies estimate their technology can double or triple the efficiency of human pickers, depending on the details of the warehouse.
The flexibility inherent in this type of automation system is especially helpful during the hectic holiday season, when online orders surge. Faulk said the company shipped “truckloads” of extra robots to customers renting them on a short-term basis to get through the peak season.
“The world has moved to an on-demand model,” said Fergal Glynn, the vice president of marketing at 6 River Systems. “On a month-to-month basis, on a quarter-to-quarter basis, (as a warehouse operator) I understand what I need, I order it, I deploy it, and use it.”
Locus and 6 River are growing quickly by plugging a specific hole in the logistics industry and increasing the efficiency of human workers. Other robotics startups in Massachusetts are taking a different approach.
Cambridge-based Vecna, for example, last year launched a new spinoff focused exclusively on warehouse robots: Vecna Robotics. Eventually Vecna plans to offer a full lineup of automated systems, but so far the company’s biggest seller, according to CEO Patt, is an autonomous forklift-like machine that can tug large pallets of boxes and other bulky containers across warehouse floors.
At the other end of the spectrum are Cambridge-based Soft Robotics and Somerville-based Righthand Robotics Inc., which are both working on robotic “hands” that can pick up a wide variety of objects, reducing the need for human pickers altogether. Soft Robotics raised $20 million earlier this year, and while the company is growing, it’s also focused a few years farther down the line than Locus and 6 River, according to founder and CEO Carl Vause.
“Right now we’re very busy, but our robots aren’t on-demand like others,” Vause said. “It’s a system that has to be put in, optimized, and up and running.”
Looking a few years into the future is difficult for any startup, of course, and especially for robotics companies. The recent shutdowns of Jibo and Rethink Robotics, both Boston startups with tens of millions of dollars of investor backing, prove that even the highest-profile robotics companies can struggle to get their technology adopted.
But Tom Ryden, the executive director of MassRobotics Inc., a nonprofit trade group dedicated to fostering young robotics companies, is confident that the e-commerce industry can provide a foundation for large, independent robotics companies.
“It is clear that this robotics-enabled warehousing is really a thing that provides value,” Ryden said. “I feel much more confident saying there will be winners out of this and there will be significantly sized winners out of this.”