Ocado today announced that it plans to buy two robotics companies to help it grow its business, speed up delivery and innovate faster.
The online grocery and technology company, ranked Top150 in RXUK Top500 research, proposes to buy piece picking robotics company Kindred Systems for about $262m (£200m), and robotic arm designer and manufacturer Haddington Dynamics for about $25m (£19.1m).
The news came as Ocado Group raised its full-year profits expectations by 50% as shoppers continue to move to online grocery “in record numbers”. It said that trends were in line with growth already seen in the third quarter of the year – and now reflecting the Christmas season.
Ocado says that full-year earnings before interest, tax and asset writedowns will be more than £60m, compared to over £40m previously.
Ocado has already invested extensively in robotics, with automated fulfilment centres enabling it to ship goods more quickly. It has previously said that its automated warehouses help it to process orders more quickly, and get up to speed faster. However, a fire at its Andover robotic warehouse in 2019 led to widening losses at the business.
Ocado now sees potential markets for the use of robotics in categories such as clothing.
Ocado chief executive Tim Steiner said: “We consider the opportunities for robotic manipulation solutions to be significant, both for Ocado Smart Platform clients and across the fast-growing online retail and logistics sectors. Ocado has made meaningful progress in developing the machine learning, computer vision and engineering systems required for the robotic picking solutions that are currently in production at our Customer Fulfilment Centre ("CFC") in Erith. Given the market opportunity we want to accelerate the development of our systems, including improving their speed, accuracy, product range and economics.
“I am delighted to be welcoming Kindred Systems and Haddington Dynamics to the Ocado group, as we believe they have the capabilities to allow us to accelerate delivery, innovate more, and grow faster. I am also excited by the opportunity to enter new markets for robotic solutions outside of grocery that is demonstrated by Kindred Systems’ robust growth, with existing customers such as Gap and American Eagle across the general merchandise and logistics sectors.”
Kindred Systems, based in San Francisco and Toronto, employs about 90 people, and was one of the first companies to use deep reinforcement learning – a form of artificial intelligence - to improve the learning process when handling different items. It develops piece-picking robots whose vision and motion control is powered by AI.
Marin Tchakarov, chief executive of Kindred Systems, said: “We have achieved very strong growth with our retail ecommerce fulfilment customers over the last three years, and the unique challenges presented in grocery fulfilment will bring an even richer learning environment, further expanding on both our technology and market solutions set.”
Haddington Dynamics is based in Las Vegas where it uses 3D printing to make lightweight and low-cost robotic arms. Its current clients include Nasa and DuPont.
Todd Enerson, president of Haddington Dynamics, said: “Our unique approach to highly dextrous robotic arms will provide meaningful benefits to delivering robotic manipulation in complex use cases like grocery. We look forward to joining the team.”
Ocado expects the acquisitions to speed up its commercialisation of robotic picking as well as other automation tasks for the third-party retail customers who use its Ocado Smart Platforms. It expects it to help save money on the £7m a year it spends decanting and picking within its customer fulfilment centres, and says the new technology will integrate "seamlessly" both with those CFCs and with its micro fulfilment centres. Overall, it expects its full-year 2021 sales to increase by about £30m as a result of the acquisitions but that it will have a small negative effect on profits.