Will robots save retailers from Amazon's onslaught?
Summary
The rise of e-commerce giants has put the profits of traditional retailers under pressure.
Amazon uses robots, AI, and automation to achieve fast product delivery and cheap prices.
Retailers have started to test various robotic systems to improve their warehouse and store operations.
Walmart is testing its Alphabot system, while companies such as Exotec, Plus One Robotics, and others are also developing innovative robotic solutions.
E-commerce’s meteoric rise isn’t slowing down. According to estimates, online sales in the US will reach $638 billion in 2022, as the stellar performance of e-commerce giants accounts for 49 per cent of retail growth last year. And while Amazon’s shareholders are profiting, traditional retailers are flirting with disaster.
Amazon boxed them into a corner with efficiency, fast product delivery, and low prices. The secret to its success is the automation of work with the help of AI and 55,000 robots, along with well-timed investments. Back in 2012, Amazon bought the robotics company Kiva Systems for $775 million and renamed it Amazon Robotics. And while Bezos was perfecting his delivery empire, traditional retailers across the world were plagued by inefficiency. The lack of real-time inventory systems cost them $1.1 trillion annually in lost revenue, while more than 40 per cent still rely on pen and paper! To overcome these problems, they realised they need to imitate Amazon.
Now, robots are rolling in across warehouses and stores in retailers’ last-ditch effort to reverse their fortunes. The industry hopes robots will speed up product delivery, improve the efficiency of workers, and assist customers. And while much of the new technology is still in early stages, its sheer variety is promising, signalling that retailers won’t go down without a fight.
Warehouse robots are becoming faster and smarter
Walmart decided to lead the way and test several warehouse robots. The first, Alphabot, was developed by the startup Alert Innovation and it will help workers fulfil online orders. Its efficiency will be tested by the end of this year in Walmart’s centre in Salem, New Hampshire. Walmart’s Mark Ibbotson writes that “When completed, automated mobile carts will retrieve ordered items – stored warehouse-style in this new space – then deliver them to our associates at one of four pick stations. Our personal shoppers will then pick, assemble and deliver orders to customers.”
On the other side of the Atlantic, the French startup Exotec is developing Skypod, a true ‘super-robot’. It’s four times faster and can climb five times higher than traditional warehouse robots, saving workers time and allowing them to focus on more productive tasks. The French e-commerce company Cdiscount is the first buyer of these robots, and Exotec plans to build a 1,000-strong army of Skypods by 2019.
The Texas-based startup Plus One Robotics entered the market as well, securing $2.4 million in funding to develop The PickOne robotic arm. The engineers are promising an arm of human-like flexibility that will pick packages from a conveyor belt. Armed with 2D and 3D cameras, it will quickly scan the belt and remove up to 25 packages per minute. And unlike humans, it can work forever without a break!
These and many other robotic systems prove retailers are willing to go to great lengths to make their warehouse and delivery services more Amazon-like. And while these robots are efficient but hardly revolutionary, customer-facing robots might give retailers the edge they need over their e-commerce competitors.
Are customers afraid?
Once again, Walmart made the first move and is testing robots that roam between shelves and shoppers. Based on Bossa Nova tech, these machines check misplaced items and prices, and inform workers to restock products. And since millennials, the first truly digital generation in the US, are 80-million strong, there’s an abundance of people that feel comfortable interacting with robots while shopping.
This fact motivated the retail chain Lowe’s to partner with the startup Fellow Robots to develop the LoweBot. This robot helps people find products they want so they don’t leave the store frustrated. Once shoppers either say or type what they want, the LoweBot guides them to the correct aisle.
With robots able to check inventory and prices, as well as being intelligent enough to find products consumers want, they’re almost making the concept of ‘opening hours’ obsolete. Why not leave the stores working the entire night? At a Best Buy location in Manhattan, that’s exactly the case. A robot named Chloe works 24 hours to retrieve products customers order. And if some items are a magnet for thieves, they can stay in locked cases.
These and many other technologies make it seem like AI and robots will replace every worker in retail. And that may not be so far from the truth, as one Chinese billionaire predicts.
The cult of robots
Richard Liu, the CEO of the Chinese e-commerce company JD.com, thinks that “Sooner or later, our entire industry will be operated by AI and robots, not humans.” And he’s putting his money where his mouth is, as the company invests heavily in automation, robots, and drones. The logistics network and warehouses of JD.com are constantly improving, and as Liu says, “We have to make a lot of innovation every day and never stop ... Reduce cost and improve customer experience. That's all.”
Another Chinese e-commerce giant is following the same philosophy. Under the leadership of Jack Ma, Alibaba’s robots became responsible for 70 per cent of tasks in warehouses. The cult of robots is so strong that the company filmed the movie Steel Soldiers about robots and humans fighting side-by-side against a common enemy.
The ultimate winner
The rapid expansion of Amazon, Alibaba, JD.com, and similar businesses is a warning sign to traditional retailers: e-commerce is here to stay. It grows fast and uses robots, AI, and automation to win customers with quick delivery and cheap prices. And if brick-and-mortar retailers want to survive, they need to innovate.
Introducing robots into their warehouses will speed up the delivery of products and make workers more efficient. Customer-facing robots have the potential to transform the shopping experience and prevent frustrating problems with incorrect prices or empty shelves, too. But for these changes to happen, retailers must act quickly and move robots from labs to stores. Only then do they stand a chance against the $1 trillion behemoth of Bezos.
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Meaning of trend
E-commerce companies have eaten into the profits of traditional retailers, and Amazon and other giants use robots, AI, and automation to crush the competition with fast product delivery and cheap prices. If traditional retailers want to survive, they’ll also have to use robots and technology to improve their warehouse and store operations. Otherwise, they’ll continue struggling.
Expert Opinion
“With the aid of Alphabot, our associates will have more time to focus on service and selling, the two things they often tell us are the most enjoyable part of the job, while the technology handles the more mundane, repeatable tasks. Although this is a small pilot, we expect big things from it,” writes Walmart’s Mark Ibbotson.
Richard Liu, the CEO of the Chinese e-commerce company JD.com, says that “Sooner or later, our entire industry will be operated by AI and robots, not humans. We have to make a lot of innovation every day and never stop ... Reduce cost and improve customer experience. That's all.”
This article was originally published in 2018 on Diynxt.com.