Ocado has invested £10m in a self-driving vehicles company that brings us a step closer to a world where online grocery orders are picked, packed and delivered entirely by robots.
The online retailer, which has previously tested a prototype self-driving truck delivering food to customers in south-east London, is backing the truck’s creator, the Oxford University spin-out Oxbotica.
The two companies plan to develop self-driving vehicles ranging from forklift trucks to delivery vans, and even a “kerb to kitchen” robot army that could usurp the humans currently dropping bags of Marks & Spencer groceries at front doors around the country.
Alex Harvey, the chief of advanced technology at Ocado, said its ambition was for the entire process, from stock arriving at its warehouses to reaching a customers’s door, to be autonomous.
“From a customer’s perspective you open your door and outside you will see an autonomous van or another autonomous vehicle pull up outside your house, and most likely an autonomous robot will get out of that autonomous vehicle, will collect your groceries, and hand them to you at the doorstep,” Harvey said.
The 2017 trials in Greenwich, London, used a small “CargoPod” that holds eight boxes and required customers to leave their houses to pick up their shopping.
The pandemic has resulted in a huge increase in grocery home deliveries as Britons have sought to avoid shopping trips during the lockdowns. Online grocery sales are double what they were a year ago, accounting for almost a sixth of the market.
There are potentially huge savings to be made out of a robot workforce, although Ocado prototypes from the tie-up are at least two years away. Ocado said the cost of moving of orders within its fulfilment centres equated to about 1.5% of UK sales and the cost of final-mile delivery is about 10% of sales. Labour represents about half of these costs.
Oxbotica was founded in 2014 by two professors, Paul Newman and Ingmar Posner, who had met as research students 11 years earlier, and was subsequently spun out as Oxford University’s robotics institute.
The pair each hold a significant stake in the business; Oxford University is also a shareholder, with Oxbotica initially surviving on research grants before relying on its own revenues once independent.
Newman and Posner are worth a small fortune, on paper at least, adding the latest £34m round of funding with a previous £14m raise in 2018. Alongside Ocado, the latest funding round was led by BP Ventures and includes the Chinese tech giant Tencent.
The deal is the latest in a series by Ocado, which has recast itself as a tech firm selling its grocery-picking expertise, through its Ocado Solutions division, to major retailers around the world. At the end of last year it bought two American companies: San Francisco-based Kindred Systems for $262m (£190m), and Las Vegas-based robotic arm designer Haddington Dynamics for $25m.
The promise shown by Ocado Solutions, which has partnerships with major supermarket chains including Kroger in the US and Casino in France, as well as the tilt to web spurred on by the pandemic, has pushed its shares up by a third over the past year. Shares were up about 1% on Friday at £21.69, valuing the group, which has made limited profits in 20 years of delivering groceries, at £16.2bn.
Ocado, which employs almost 19,000 staff, said the vehicle autonomy programme would not change “current hiring or employment levels within logistics or operations groups”.
Owing to regulatory and complexity reasons, the company said the development of vehicles that operate in low-speed urban areas or in its warehouses and yards “may become a reality sooner than fully autonomous deliveries to consumers’ homes”.
Shore Capital analyst Clive Black said the focus of Oxbotica’s robot work pointed to the replacement of human delivery drivers.
“Oxbotica is not alone in such development work, with many players around the world active in remote delivery vehicle and drone development,” said Black. “What we see here is another iteration of the longstanding labour versus capital debate.”