According to a story out in Bloomberg today, Instacart is looking to create automated fulfillment centers, which would use robots to assemble grocery orders. These fulfillment centers would either be standalone or attached to an existing grocery store.
From the Bloomberg story:
Under one proposal, Instacart would create a network of stand-alone fulfillment centers that would handle more than 3,500 orders a day with more than 100,000 units sold, according to documents reviewed by Bloomberg. More than 700 robots and about 160 people would do the work, with the machines fetching most of the items and workers gathering fresh and perishable food. The installation would cost $20 million, with annual maintenance costs of $380,000 a year. A second option is a smaller 25,000-square foot attached to a store that would handle more than 700 orders a day totaling 22,000 items. It would have more than 150 robots, 40 workers and would cost $6.5 million to set up and $270,000 a year to maintain, according to the documents.
The reason for this automation plan is simple: speed. Speed of order fulfillment is becoming more critical to a grocery retailer’s success than ever. The pandemic forced a lot of people into trying online grocery shopping last year, and while overall grocery e-commerce numbers have dipped since the record highs of 2020, the habit appears to be sticking with people. Brick Meets Click data showed that online grocery sales for pickup or delivery were $6.6 billion in April of this year. That’s down from the $7.1 billion in grocery e-commerce sales in March of this year, but up from $5.3 billion in April 2020.
All those online grocery orders need to be picked and packed before they get to the customer. Instacart’s current solution is to have human gig workers (Instacart’s “Shoppers”) do this. But a robotic fulfillment center can assemble a grocery order in minutes, which is much faster than a person wandering the aisles looking for particular brands of peanut butter and loaves of bread.
This need for speed is why so many existing grocery retailers are investing in automated fulfillment. Kroger recently opened up the first of its standalone, automated Customer Fulfillment Centers powered by Ocado’s robotic technology. And both Walmart and Albertsons are expanding their use of automated fulfillment centers as well.
Instacart is obviously feeling the time crunch. Earlier this month, it launched a 30-minute delivery service of its own, but that service is only available in 15 cities right now. But Instacart faces pressure from a new wave of delivery-only startups vying for your speedy delivery dollar. Gopuff averages half-hour delivery times and operates 24 hours a day. And startups like Fridge No More and Gorillas offer delivery with no minimum order in just 10 – 15 minutes. No wonder Instacart is eyeballing automating some of its processes.
Of course, any talk of automation immediately brings up the question of jobs and who will get replaced. It’s a big, ongoing discussion around the push and pull of innovation, equality and what kind of society we want to create. In the case of Instacart, it’s a natural question to ask as the company swelled its gig shopper ranks to more than 500,000 shoppers during the height of the pandemic last year. What happens to all of those people when the robots come in?
We reached out to Instacart for comment on the Bloomberg story and received the following emailed statement:
We’re constantly exploring new tools and technologies that support the needs of the 600 retailers we partner with and further enable their businesses to grow and scale over the long-term. Shoppers are and will continue to be central to Instacart and our service, and any suggestion otherwise is wholly inaccurate.
Bloomberg writes that Instacart hasn’t signed on any retail partners for its automated fulfillment plans as of yet, and as of right now any speculation around Instacart’s automation plans is just that, speculation. Instacart is undoubtedly exploring a number of different technological options as it marches towards its inevitable IPO, and those plans will most likely include robots of some kind.