Supply Chain Tech Monthly Roundup — January 2023 — Is Walmart beating Amazon?

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Supply Chain Tech Letter

16 min readFeb 13, 2023

Happy New Year! May I be the last to utter those words to you until next year.

Welcome to the January monthly roundup of the supply chain tech industry, where I’ll provide quick tidbits and links about recent supply chain technology news around companies, trends, and innovation.

In this month’s roundup:

Is Walmart beating Amazon?
Raises and Acquisitions
Company News
State of the Industry
Companies Hiring

Let’s kick it off with an announcement. I’ve moved my newsletter over to Substack. Please consider subscribing here.

Is Walmart beating Amazon?

Every now and then, new companies come in, disrupt an industry, and put an old company that failed to innovate out of the game. Most infamous example? Netflix and Blockbuster. Another? Sears and e-commerce companies.

A similar question arose when Amazon came on the scene and started gaining popularity. Would Amazon put Walmart out of business? Well, so far out of business, no, but in 2021 Amazon dethroned Walmart as the world’s largest retailer outside of China.

But let’s niche down a little bit more. Both companies are known for their extensive and frankly impressive supply chain operations, so how are they faring against each other in the supply chain tech space?

Let’s break it down into three rounds.

Round 1: Drone Delivery

Walmart completed 6,000 drone deliveries in 2022. Amazon completed…less than 10.

Walmart currently has 36 stores with drone delivery hubs operated by DroneUp, Flytrex, and Zipline across seven states. Due to positive responses from customers, the company plans to keep pushing forward with drone deliveries in 2023. Walmart offers 20,000 items available for drone delivery, and favorite products include cookies and cream ice cream, rotisserie chicken, and paper towels. Walmart’s goal is to deliver one million packages via drone annually.

Meanwhile, almost a decade ago, Jeff Bezos first promised delivery drones. While drone deliveries have progressed, Amazon has fallen behind the pack. In its first month of starting drone deliveries, Amazon Prime Air has delivered to fewer than ten households. FAA restrictions have held them back as the FAA required their drone pilots to have private pilot licenses (the kind you need to fly a plane), observers, and ground station operators for a drone delivery to be made. Last year, Amazon had five drone crashes within four months, one of which led to a 25-acre brush fire at their testing facility in Oregon. Since then, Amazon has successfully gotten the FAA to reduce some of its drone restrictions, but big ones, such as not being allowed to cross a road by itself and not being allowed to fly near or over people, still remain. Amazon is currently operating drone deliveries in Lockeford, California, and College Station, Texas, but recent layoffs in their drone delivery division call into question Amazon’s drone delivery ambitions’ future. While Amazon didn’t deny these layoffs, they did say that drone delivery operations in California and Texas continue to expand and that the company is still working on its next-generation drone, the MK30.

Did Amazon make a mistake by not outsourcing their drone deliveries to drone delivery companies as Walmart has done?

Round 1 Winner: Walmart

Round 2: Logistics-as-a-service

Walmart is offering store fulfillment tech and local delivery services through Salesforce. Walmart GoLocal, Walmart’s same-day delivery offering, and Walmart Commerce Technologies’ Store Assist, which “essentially turns any store into a fulfillment center” will be available through Salesforce AppExchange. The partnership aims to offer retailers access to more cost-effective local fulfillment and delivery solutions.

Amazon will expand “Buy with Prime” to all US merchants by January 31st. This new feature will allow Prime members to shop on outside websites using their saved checkout details and access Prime benefits like free delivery and returns. When a company adds “Buy with Prime” to its website, Amazon will handle payment, processing, storage, packaging, delivery, and returns through its fulfillment network. Amazon says that its “Buy with Prime” program has increased shopper conversion by an average of 25%. Amazon likely made this move to make use of the excess warehouse space they built during the pandemic.

Walmart launched GoLocal in 2021 and, within a year, surpassed one million deliveries. Commerce Technologies launched about a year ago, and it’s Store Assist technology has helped Walmart fulfill more than 830 million orders since 2019. Salesforce Commerce Cloud is one of the top commerce cloud providers giving Walmart exposure to many customers that can tap into their supply chain network.

However, Amazon wins in this category. Why? Brand power. Everybody knows Walmart and Amazon, but I’m talking more specifically about Prime. When customers see the Buy with Prime badge, they immediately associate it with free and fast delivery. It will make customers feel like they are getting more out of their Prime subscription by using the button to get a faster checkout experience and delivery. With over 168 million US Prime subscribers to tap into, it will be a strong pulling factor for US merchants to implement the button and tap into Amazon’s extensive logistics network. It also helps Amazon out with its excess warehouse space problem.

Round 2 Winner: Amazon

Round 3: Robots

Since 2013, Amazon has increased its headcount from 88,000 to 1,608,000 in 2022. That’s a 1,727% increase in human staff over nine years. But another interesting increase is Amazon’s number of robots. Over the same time period, Amazon increased its number of robots by 51,900%. The company went from 1,000 robots to 520,000 robots. Most of these robots are used in their logistics operations. Amazon has been working hard on building robots. They have everything from autonomous mobile robots to robotic picking arms to robots that can sort packages. But it raises the question of whether robots will eventually replace workers at Amazon fulfillment centers. Ark Invest’s Cathie Woods seems to think so. She says that Amazon is adding a thousand robots a day and that by 2030 she anticipates they will have more robots than employees.

Go big or go home? Walmart’s Sam’s Club announced that they plan to open 30 new locations across the US over the next several years. Coming in at 160,000 square feet, the stores will be about 20,000 square feet larger than their current clubs. In addition to the new stores, Sam’s Club says it is embarking on a new plan to “invest in and modernize its supply chain.” The company plans to open five new high-tech distribution centers this year alone. The first will open in Georgia in the third quarter. Sam’s Club says the new distribution centers will feature “state-of-the-art automation and robotics.” This news comes as no surprise since Walmart announced last year that they were building four high-tech fulfillment centers for their Walmart stores over the next few years. Walmart also owns a majority stake in warehouse automation provider Symbotic and plans to roll out Symbotic’s solution across all of its regional distribution centers.

I’m marking this round as a tie. Both companies have made impressive strides in modernizing their supply chains with robots and automation. Walmart is working on implementing high-tech fulfillment centers by partnering with automation companies such as Knapp, Symbotic, and Witron. They’ve shown their commitment by taking a majority stake in Symbotic, which makes end-to-end warehouse automation solutions. Amazon has taken a different approach by developing its robots in-house but is not opposed to acquisitions, as indicated by its purchase of Kiva Systems and Cloostermans. It will take some time to determine if an outsourced approach is better than an in-house solution. Still, ultimately it will come down to who executes their modernization strategy better. Only time will tell.

Round 3 Winner: Tie

Overall Winner: No one…yet, but I’m open to others’ opinions.

We need more time to see where these initiatives take each company. Drone delivery may lose favor in the future, and I still see it as a relatively risky bet that’s slowly becoming less riskier. Outsourcing their supply chain power is a step in the right direction, but we are seeing competition from Shopify, American Eagle, and GAP. And I expect that trend to continue and for big players like Amazon and Walmart to face similar pressures like what FedEx and UPS are starting to feel when it comes to smaller players coming into the delivery space. And with both Amazon and Walmart taking similar strides towards automation, it will be hard to call that one. If I’m being honest, I don’t think there will be a clear winner in this category, as they both have the money and power to orchestrate the modernization strategy they need. Neither is falling behind the other.

Company News

Waabi, an autonomous trucking startup, brings on Volvo as a strategic investor. This investment will give Waabi access to Volvo’s extensive industry network and help the startup with large-scale commercialization. Volvo is no stranger to autonomous trucking, and Volvo has unveiled autonomous truck concepts in years past and most recently partnered with Aurora to build autonomous semi-trucks jointly. Waabi is purpose-built for OEM integration. Waabi’s Driver (made up of sensors, software, and compute power) is meant to be directly manufactured into the truck on the assembly line. This prevents trucks from having a clunky exterior because it is outfitted with exterior autonomous equipment like cameras.

Forum Mobility, a trucking as a service startup, announced a $400M joint venture with CBRE Investment Management and Homecoming Capital. The joint venture aims to create charging depots for electric drayage trucks in California. The California Air Resources Board has proposed to ban diesel drayage trucks at ports by 2035. Trucking companies raised concerns about the lack of charging infrastructure. The California Energy Commission estimates California needs 157,000 medium and heavy-duty chargers by 2030 to meet all proposed regulations. A deal like this would be a step in the right direction in reaching this goal. Forum Mobility has already identified 10 locations close to Long Beach and Oakland ports. CBRE invested $300M, and Homecoming Capital invested $100M in the joint venture. Forum Mobility also announced the closing of a $15M Series A round. Participants include CBRE Investment Management, Amazon’s Climate Pledge Fund, Elemental Excelerator, Obvious Ventures, Edison International, Overture, and Homecoming Capital. The funding will go towards growing their team to 20 people by the end of the year.

One disadvantage of autonomous vehicles is that they need to have the sensory ability to detect lack of grip on icy and wet roads. This is why autonomous vehicle testing tends to happen in sunny climates. Gatik, an autonomous trucking startup, and Goodyear, a top tire manufacturer, have partnered to work on this problem. The companies are working on intelligent tires that can accurately estimate tire-road friction and provide real-time information to Gatik’s automated driving system. Goodyear has recently deployed its road friction detection technology called SightLine in Canada. It gathers wear state, load, inflation pressure, and temperature data that is fed into Goodyear’s proprietary algorithms to develop a friction estimate that helps detect low-grip conditions like snowy and icy roads. Eventually, this friction estimate data would be fed back into Gatik’s autonomous fleet to assist with path planning and providing recommendations for safe driving speed, vehicle acceleration limits, and vehicle following distance. Goodyear says that eventually, the data would go beyond friction estimates and start providing information on the tire’s health and collect information on road conditions like potholes.

Aurora announced in December the release of Aurora Driver Beta 5.0, the fifth release of its integrated hardware and Level 4 driving system. The new release includes emergency vehicle detection and response. It can safely reenter traffic after pulling over on the shoulder of the road and navigates construction sites with temporary barriers. Aurora is targeting commercialization by the end of 2024 through Aurora Horizon, a subscription-based autonomous truck service. Before this can happen, Aurora says they need to solve a few more driving complexities. Aurora’s co-founder and CEO, Sterling Anderson, says that this feature-complete milestone is huge because it is their confirmation that Aurora Driver can operate in commercial settings and handle nominal or off-nominal conditions.

Walgreens opened its ninth automated pharmacy fulfillment center. Walgreens micro-fulfillment centers use robots to fill prescriptions, eliminate routine tasks, and eliminate excess inventory from the pharmacy. The automated facilities support about 3,000 stores. Walgreens has struggled to hire pharmacists in key markets and hopes to use these micro-fulfillment centers to eliminate repetitive tasks while making the company more attractive to healthcare workers. According to their Chief Supply Chain Officer, Walgreens fills around 60% of their prescriptions through automation and is considering using the facilities for more retail products in the future. Walgreens hopes to expand to 22 automated micro-fulfillment centers.

Google unveils shelf inventory AI tools for retailers. Google Cloud has developed a new AI tool to help retailers track inventory on their shelves better. Google says its algorithm can analyze and recognize the availability of consumer packaged goods on shelves from videos and images provided by the retailer’s ceiling-mounted cameras, camera-equipped self-driving robots, and store associates. The goal is to give retailers timely and accurate inventory information. This would provide retailers with the ability to replenish out-of-stock items faster. Computer-vision-enabled shelf-checking technology is not new, but several problems have held it back. These include cost, complexity, lack of data, and the AI model itself. Giant Eagle has been working with Google Cloud to test the technology and provide feedback. The supermarket chain says the accuracy is over 90% but is not high enough to consider deploying it at scale. Technology like this is expected to take at least three to six years before becoming more mainstream.

Maersk is turning towards drones to manage inventory counts in its warehouse network. Maersk contracted with Verity, a nine-year-old startup specializing in inventory drones. The autonomous drones travel through the warehouse on nights and weekends, collecting data and identifying inventory, such as missing or misplaced pallets. This data is sent back to Maersk’s warehouse management system. The drone project started six months ago and currently operates at four sites. The deployment plan for 2023 is to roll out the drones in all of its warehouses with pallet storage.

Shipping platform Freightos goes public via SPAC under the ticker symbol CRGO. It opened at $22.76 a share but fell to $10.49 at close. Freightos raises $80 million through the merger deal with Gesher I Acquisition Corp. The company’s platform allows shippers to compare prices and book spaces on planes and ships. Freightos’ CEO tells investors to look at the stock as a long-term investment because massive revenue and profit will take time.

Online pet retailer Chewy plans to open more automated fulfillment centers in 2023. Chewy has opened three automated fulfillment centers so far and has planned to open two more over the next 15 months. The centers use automated storage, retrieval, and sorting systems, otherwise known as ASRS. The company says the centers require a third less people to run. Chewy expects a 50% improvement in labor productivity and a 30% reduction in fixed and variable costs.

Unfortunately, layoffs have continued into the new year. Layoffs in the supply chain tech space:

Raises and Acquisitions

January supply chain tech funding: $780.5M+

Profet AI raises $5.6M seed round led by Darwin Ventures. The company makes auto machine learning for manufacturers. The funding will be used for market expansion into Japan, Southeast Asia, and China.
Alterpacks raises $1M pre-seed round led by Plug and Play APC and Seed Capital. The company uses technology that turns food waste into takeout boxes and other containers. The funding will be used for commercialization in markets like Asia, Australia, and Europe.
Worlds Enterprises raises $21M Series A led by Moneta Ventures. The company is an industrial metaverse platform that can create digital twins of operational sites so that companies can measure their operations.
Locad raises $11M Series A led by Reefknot Investments. Locad provides a cloud-based platform to omnichannel e-commerce companies that connects them to its third-party warehouses and carriers network. The new funding will go towards adding more warehouses and transport operators to its network and hiring in Southeast Asia and Australia.
Brightpick brings in $19M in funding for Photoneo’s $40M Series B round. Brightpick is the business unit of Photoneo that provides warehouse automation systems. The funding will go towards US expansion.
Outrider raises $73M Series C led by FM Capital. Outrider makes autonomous electric yard trucks. The new funding will go towards commercialization and hiring.
Addie raises $10.M seed round led by Disruptive Innovation Fund. Addie is a drive-up grocery store serving as an alternative to online grocery delivery. The funding will go towards hiring and technology development. Now that its first store is open, the company has goals to expand to more than 2,000 locations.
PortPro raises $12M Series A led by Avenue Growth Partners. PortPro is a TMS provider to container drayage and intermodal carriers. The funding will go towards expanding their platform’s capabilities.
Gemba raises $18M Series A led by Parkway Venture Capital. Gemba is an enterprise-focused virtual reality training startup. The company offers virtual masterclasses that cover topics such as supply chain management and lean manufacturing. The new funding will go towards expanding its growth in EMEA and eventually to North America.
Secai Marche raises $1.6M Series A. The company is a farm-to-table fulfillment platform that offers its services to farmers in Japan and Southeast Asia. The new funding will go towards developing its demand forecasting system and optimizing its truck routes as they expand.

Acquisitions:

Relationshop acquires Stor.ai. Relationshop makes online shopper engagement tools for retailers, and Stor.ai provides regional grocers with e-commerce fulfillment services. The deal is said to be worth over $50 million. The combined companies will operate under the Stor.ai name and integrate Relationshop’s analytics and personalization technology into Stor.ai’s business.

Descartes Systems Group acquires Supply Vision. Supply Vision offers supply chain management solutions to North American logistic service providers. Descartes paid $12M for Supply Vision and says it could rise to $15M if Supply Vision hits its revenue-based targets.

Last month, Trimble acquired Transporeon in a $2 billion all-cash deal. This article discusses the potential reasonings behind the deal. Assumptions are that it will strengthen Trimble’s technology and expand its international client base.

State of the Industry

My first newsletter post on Substack was about supply chain technology featured at CES 2023. Check it out here.

McKinsey published a five-point guide for digital transformation applicable to supply chain digital transformations.

Target senior digital leaders
Rethink digital-talent value proposition
Be realistic about reskilling
Build learning & development programs
Leverage temporary contractors

According to a study by Interact Analysis, the warehouse automation market growth is expected to cool down in 2023. The warehouse automation market grew by 28% to $36 billion in revenue, up from $28.5 billion in 2020. Part of what kicked off this hypergrowth was the rise in e-commerce spending during the pandemic. Now that consumers are returning to stores and Amazon, one of the biggest spenders in the space, is starting to scale back its fulfillment operations, the market is expected to cool. Due to this, Interact Analysis expects growth to slow to 2% in 2023 but return to stronger growth (19% CAGR) by 2027. Here’s an article that covers the latest report, which contains the same sentiment as the previous report, with an emphasis on autonomous mobile robots (AMRs) expected to make up 30% of the market by 2027.

In this WSJ, the University of Tennessee researchers talk about what companies can do to improve their returns process. The pair has broken the returns process into five parts: pre-sale, initiation, induction, network & processing, and disposition.

ManufacturingDive looks at some of the key technology trends impacting the industry.

Dynamo Ventures published a post that breaks down the procurement process and discusses the rise of innovation within the procurement space.

Here’s a great piece by ModernRetail that discusses the rise and fall of 15-minute delivery startups.

Since 2020, investors have been funding supply chain tech companies at a rate of $9B a quarter. Bloomberg talks about the ‘Golden Age’ of supply chain.

How do you successfully scale mobile robot fleets? This article breaks down some of the factors.

McKinsey looks at the cost competitiveness of drone delivery and whether it will be a viable delivery alternative in the future.

CNET breaks down the current state of drone delivery, including what’s it like and the regulations drone companies face.

Is consolidation in the autonomous trucking market coming, and how will it happen if so?

Podcast and Video Recommendations:

Companies Hiring

Symbotic

Director of Operations — Remote
Industrial Controls Engineer — Remote
Senior Software Engineer, Next Generation Robotic Warehouse Systems — Remote

Outrider

Technical Program Manager — Remote
Machine Learning Engineer — Remote
HR Business Partner — Remote

DroneUp

Automation Engineer — Remote
Product Manager, eCommerce — Remote
Sr Product Designer — Remote

Other Companies

Amazon — Tech Onboarding Specialist, Buy with Prime — Remote
Chewy — Manager, Automation & Engineering — Multiple Locations
Milk Moovement — Demand Generation Specialist — Remote
Two Boxes — Senior Software Engineer — Remote
Walgreens — Senior Solutions Engineer — Pharmacy Fulfillment — Remote

Follow me on Twitter where I share even more supply chain tech news here.