Automation is Coming to Commerce … And Why That’s a Good Thing
When we order something online, we want it yesterday…and for free. For this to happen, after an item is ordered, in the time it takes to stream of a Master of None episode, it needs to be picked and packed in the appropriate fulfillment warehouse, sorted and loaded onto the next departing truck, routed through transportation hubs for consolidation and deconsolidation, and finally put on a box truck for delivery to your home or place of work. Oh yeah — that doesn’t come cheap: probably $10/$15 per order.
Of course expertise in merchandising, pricing and product differentiation have been the table stakes for any commerce provider since the original general store, and whether online or offline they will never stop iterating and competing on merchandise. But giving consumers not just what they want, but how, where, and when they want it is the holy grail — and in the coming years, I believe as a result will truly drive the greatest shift in commerce, through amazing improvements made behind the scenes.
I could write ten blog posts about friction in commerce logistics (probably ten thousand posts but I don’t like to write that much). As a firm with deep interest in commerce, we at Upfront Ventures have spent a lot of time identifying and investing in the best-in-class solutions for commerce logistics pain points: Deliv for same-day, last-mile delivery, Happy Returns for in-person returns, and Qordoba for internationalization, just to name a few. But warehouse logistics — a $40B+ market today — has been an unsolved area of opportunity.
The standard playbook for commerce players was to build large, centrally located warehouses in less-populated parts of the country, strategically placing them close to their shipping partners in order to streamline logistics and get the cheapest shipping rates. (That’s why Hebron, KY, with a population of <6,000 has huge name recognition for people outside of Kentucky.) And when labor is overwhelmingly the largest cost of operating a fulfillment warehouse, it makes sense to operate in such less expensive areas.
The challenge is that the locations that offer commerce companies the available warehouse space they need at a price they can afford are not located where the bulk of the population lives. In the highly cyclical commerce industry, Q4 invariably brings a capacity crunch across the entire supply chain. Commerce players that have the demand and the capital to add staff and shifts are often not able to. (Even all-mighty Amazon is not immune to this challenge — on August 2, 2017, Amazon held, to much fanfare, an Amazon Jobs Day advertising 50,000 job openings. Only 20,000 applied.)
With unemployment at a 16-year low — 4.1% across the country in January — there is no slack in the labor supply. And with the commerce industry growing at 16% annually, warehouse jobs are going to continue to multiply, leaving a delta between what the customer wants and what the company can provide.
Despite all of these challenges, only 5% of all fulfillment warehouses are automated, for obvious reasons: it’s expensive, with an upfront capital expenditure often upwards of many millions per location. It’s also incredibly disruptive to pause and re-fit an entire fulfillment center — especially with a solution that might no longer fit your needs in three years. As the industry moves to a more distributed fulfillment warehouse model (instead of one 1,000,000 square feet location, you might see ten 100,000 square feet locations), companies can’t spend the same amount of money on automation capital expenditures. There’s never been a scalable, flexible, affordable automation solution — until now.
inVia Robotics builds simple and affordable robotic picking automation for warehouses and commerce players of all sizes; a low-cost “goods to person” solution that optimizes for human strengths (dexterity and judgment) and safely fills in the gaps with robot technology. The inVia robots autonomously navigate warehouse racks to deliver product and bins to humans for picking, dramatically cutting down the time to pack a shipment (as well as boasting a not-too-shabby order accuracy rate of 99.88%.)
inVia offers a turnkey solution that can be dropped into an existing warehouse without having to change layouts or workflows or redesign a legacy WMS — all time and resource-intensive propositions that usually stop automation discussions before they start. Instead, inVia only requires warehouses to attach strips of QR codes to existing shelving; their Robotics Management Software integrates seamlessly with existing warehouse management systems and allows inVia to remotely manage the robotics fleet (setup, maintenance, monitoring, etc.) as well as direct robots and humans for optimal efficiency; no robotics expert required on-staff. (The system can also be run as a stand-alone so as to avoid any WMS integration, if desired.)
Best of all, inVia offers a unique “robotics-as-a-service” model: it can be something like $1K/robot/month. Companies can have one robot or hundreds, flexing the fleet up and down based on specific company needs, demand projections and staffing needs, at a fraction of the price of other robotics and automations solutions. It’s the perfect complement to any existing warehouse and workforce, and one expects warehouse picking and restocking costs inVia’s beta clients to decline by 20–50%. New client Hollar anticipates a 300% increase in order fulfillment with inVia implementation.
As always, it takes an incredible team to build such an efficient, easy-to-use, customer-centric solution. inVia Robotics is built by a team of robotics and vision experts from the alphabet soup of venerable institutions in greater Los Angeles: JPL, SpaceX, Raytheon, CalTech, and USC Robotics. Co-founders Lior Elazary (CEO), Dan Parks (COO), and Rand Voorhies (CTO) were the developers behind several state-of-the-art DARPA-funded research projects from neuromorphic systems for object recognition (NeoVision2) to visual warning systems on smart binoculars (CT2WS).
Lior is also a serial entrepreneur with several successful exits, including EdgeCast which he built while on leave from his PhD program and sold to Verizon for $400 million in 2013 — one of LA’s unheralded success stories. He understands the changing needs and resources of growing companies, as well as what commerce executives and fulfillment experts really care about, and has tailored the inVia systems accordingly.
He also knows how to manage a business with capital efficiency; when we walked in their SoCal offices and saw all the robots roaming around a demo area picking totes, we expected them to have spent ten times the money they have spent to get to this point.
For all of these reasons, we are excited to lead the Series A financing for inVia and to support the team as they make massive shifts in warehouse operations. With 300 million items shipped per day globally and projecting to double over the next five years, commerce has a capacity crisis — and inVia is up to the challenge.
See Lior’s recent presentation at the Upfront Summit here:
