As I pen this article, Walmart is already ushering in the Holiday season with its “Early Deals” dropping online tonight at midnight (five weeks before Black Friday). Since more than half of US consumers prefer e-commerce over brick-and-mortar stores, close to 40% plan to start checking off Santa’s list by Halloween, according to the latest survey by Deloitte. A big driver for 72% of Internet customers is free shipping, which leads to a hiring and tech boom at warehouses across the continent.
Logistics in America is one of the fastest growing private sectors of the economy, generating more than $1.6 trillion of spending (or close to 10% of GDP) in supplychain, transportation and distribution investments. Warehouse Management Systems (WMS) accounts for $5 billion alone, resulting from the increasing demands of web fulfillment. ABI Research states in its WMS report: “The continued growth of the e-commerce market and rising customer expectations are putting enormous pressure on warehouses to execute more rapid and flexible deliveries. This is driving investment in warehouse facilities, automation technologies, and warehouse management systems to coordinate and optimize operations.”
Almost parallel with the growth of WMS is venture capital’s investment into the category. Earlier today Fabric (formerly Commonsense Robotics) announced it had closed a Series B financing round of $136 million, after raising $20 million the year prior. The company boasts of a platform to deploy “micro-fulfillment centers” using its proprietary artificially intelligent rovers to move goods around the distribution center to human employees. According to Steve Hornyak, Fabric’s Chief Commercial Officer, “It [Fabric] enables retailers that don’t have the resources or infrastructure to build an entirely new fulfillment operation themselves to access a world-class logistics solution that enables profitable on-demand fulfillment.” This is welcome news as a fraction of the 400,000 warehouses in the United States are automated; in 2016 it was estimated that only 10% were fully mechanized. A big hurdle is the cost of upgrading these large facilities that could be three football fields in length or $2 to $20 million in robots depending on the square footage. Fabric, while convenient for specialty retail, still leaves the door wide open for market disruption, especially by innovators that leverage existing processes to steer automation.
Every warehouse uses pallets to stack and move goods around their facility, globally there are more than 2 billion pallets in existence with half a billion new ones made each year. The Global Pallet market is expected to increase to $25 billion incrementally over the next five years with the adoption of more environmentally-friendly reusable plastic materials. Given that distribution managers purchase or rent pallets every day, the value proposition of adding inexpensive technology to this existing storage platform could be a game changer in revolutionizing the industry. This idea was first proposed to me last week at New York University’s Endless Frontier Labs by Atle Timenes, the founder of wheel.me. Timenes impressed me by illustrating how his Nordic startup plans on reinventing a 5,500 year old invention – the wheel.
In speaking further with Timenes he explained the origins of the epiphany, “Our journey started with the inventor Rolf Libakken (his co-founder) helping his family move several times during a short period. The obvious question when moving heavy objects was, ‘why aren’t these things on wheels?’ A mechanical ‘click-wheel’ was invented, much like the principles of a ballpoint pen, serving also as wheel.me’s first commercial product.” This click-wheel castor was invented in 2013, which added manual rolling motion to any static object. Fast forward a few years Timenes and his team upgraded their patented solution by stuffing a motor, gearing, batteries and vision sensors into their cylindrical sleeve. Unlike other robo-solutions that charge upwards of thousands of dollars a unit, wheel.me offers a modest monthly subscription of ten Euro’s per wheel. The monthly fee for “wheel.me Genius” product includes access to its dashboard that enables non-technical managers to synchronize all their wheels in motion. “Positioning and navigation data are sent and received from the cloud. The system can run on Wi-Fi or a local network. Data science capabilities are added for a backend/cloud solution and with swarm-enabling technology wheel.me can perform coordinated movements with a large number of objects,” Timenes describes.
The total available market opportunity for wheel.me Genius is huge, upwards of $170 billion a month, as each pallet would contain 8 castors. The Oslo roboticist expounded, “Automation is rapidly changing the landscape for businesses. Still, early adoption could lead to risks affecting financials, quality, safety and process. wheel.me Genius takes down entry barriers to adapt automation technologies due to orders of magnitude lower costs and charging according to an indoor-mobility-as-a-service model, making pay-back and Return-on-Investment (RoI) highly attractive.” I pressed Timenes on how he plans to compete against larger competitors that utilize Automated Guided Vehicles (AGVs) and Autonomous Mobile Robots (AMRs), he retorted, “Existing solutions require frequent human intervention to load/offload and manage the object being lifted, dragged or pushed. wheel.me finds it counterintuitive that objects that already are fitted with wheels (or easily could be fitted with wheels) should need a ‘device on wheels’ (AGV or AMR) to be able to move them.” He continued, “In line with the classic description of a disruptive innovation, we believe that current suppliers of automated indoor mobility and materials handling solutions are on a performance trajectory that is tailored to the high-end of the market. wheel.me Genius initially might be less attractive than existing competitors based on traditional performance parameters – power, speed, and lifting capacity – while they will add new performance parameters to completely alter the competition – in this case flexibility from making any object smart and set for autonomous movement, and orders of magnitude lower costs.” Making any object smart could include anything with wheels from event chairs to parking systems to manufacturing equipment to (of course) billions of pallets.The optimism of Timenes is grounded in the increasing significance of the Scandinavian robot ecosystem that made headlines this summer with a series of prominent acquisitions. In June, USA private equity firm Thomas H. Lee purchased AutoStore for $1.7 billion. The Nordic concern is considered one of leaders in mechatronic logistics with 11,000 robots in operation across 28 countries. A few months later, Denmark-based Blue Ocean Robotics acquired American telepresence leader Beam Technologies. Northern Europe has a history of automation success stories with the founding of Universal Robotics and MiR (Mobile Industrial Robots) both owned today by publicly-traded Teradyne. One of the big backers of the local startup economy is Copenhagen’s venture capital firm Nordic Eye. In the words of the firm’s Chief Executive, Michael Tandrup, “The first time I came here, I thought maybe I’d be shaking hands with a person who’d turn out to be a robot! But everything on display was arm robots. I was actually kind of disappointed. But I could see that these collaborative arms were bringing robotics beyond the big automotive OEMs to something every company can afford to use.” In the spirit of my discussion with Timenes, I am convinced that nothing could be more useful (and affordable) than an autonomous wheel.