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Kroger acknowledges that its bet on robotics went too far

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Re: Kroger acknowledges that its bet on robotics went too far

#171

Post by mrweasel »

danpalmer wrote: post #34

This is a failure of business model and logistics, not a failure of the robotics. > Fenyo added that Kroger’s decision to locate the Ocado centers outside of cities turned out to be a key flaw. They over-spent on automating low-volume FCs. You could draw comparisons to Amdahl's law, they optimised the bit that wasn't the issue, the real issue was delivery distances and times. Ocado has had good success with the robot…

It's even explained in the article:

> You didn’t have enough people ordering, and you had a fair amount of distance to drive to get the orders to them

It's clearly not a technology problem, but it was made worse by heavily investing in robotics for locations that already couldn't sustain a fulfillment center.

Re: Kroger acknowledges that its bet on robotics went too far

#172

Post by Computer0 »

roryirvine wrote: post #148
simgt wrote: post #136

Earlier quoted context omitted.

Where are you operating? I live in a dense European city and I don't know a single person who orders groceries online. Smallish shops with bike racks in front of the door are simply too convenient, seems hard to beat. Next few days shopping can easily be done in 15mn on the way back home.

I live in inner London. I have multiple grocery shops around me - within 10 minutes' walk I have a fishmonger, two butchers, two delicatessens, three bakeries, three greengrocers, four mid-sized organic/international grocers, six patisseries, a large Lidl, and a very large Sainsbury's supermarket. I visit those local shops once or twice almost every day to pick up fresh bits and pieces - but I still get bulky or heav…

There is a gas station that sells candy and stale jerky, a hard, sidewalk-less 10 minutes walk from me (probably 20). Not sure it would be feasible to go anywhere else. -American

Re: Kroger acknowledges that its bet on robotics went too far

#173

Post by roryirvine »

Computer0 wrote: post #172
roryirvine wrote: post #148

Earlier quoted context omitted.

I live in inner London. I have multiple grocery shops around me - within 10 minutes' walk I have a fishmonger, two butchers, two delicatessens, three bakeries, three greengrocers, four mid-sized organic/international grocers, six patisseries, a large Lidl, and a very large Sainsbury's supermarket. I visit those local shops once or twice almost every day to pick up fresh bits and pieces - but I still get bulky or heav…

There is a gas station that sells candy and stale jerky, a hard, sidewalk-less 10 minutes walk from me (probably 20). Not sure it would be feasible to go anywhere else. -American

That's the thing, though - you'd think that this would result in these "heavyweight" Ocado-style home delivery options being more viable in the US than in London. And yet, they're not.

Sure, you have Doordash-style same-hour options which are largely based on someone picking stuff up from a local store on your behalf (we have lots of those too). But the Ocado/Kroger robotic hive fulfilment centres ought to be more efficient than that whilst offering higher quality by cutting out the labour-intensive warehouse -> store -> shelf -> checkout part of the process.

I think some of it comes from a feeling of "that can't possibly work", perhaps as a hangover from the failure of Webvan during the dotcom boom. Maybe with some "well, I have to use my car for everything else, so I might as well use it to collect groceries too" layered on top.

Which all points to it being a fairly intractable problem - there are a bunch of only tangentially-related issues that need sorting out before it can be become a widespread success.

Re: Kroger acknowledges that its bet on robotics went too far

#174

Post by hypercube33 »

Animats wrote: post #75
markus_zhang wrote: post #25

I had a wonderful retro futuristic dream about an automated Costco warehouse a few weeks ago. It was one of the less weird dreams so I still remember it clearly. Basically, each section is like a closed areas with some windows. Customers order at the computers by the windows and flash their membership cards. Robots glide left and right to move 10 samples to the customer, in an arm with rotating clips. Customers can p…

What you've re-invented is Keydoozle, from 1937.[1] This was the first automated grocery store. Three stores were opened, but there were enough mechanical problems that it didn't work well. [1] https://rarehistoricalphotos.com/keedoozle-automated-store-p...

Thank you for that rabbit hole. Interesting that the same guy gave us both of the present day shopping systems just one was too far ahead

Re: Kroger acknowledges that its bet on robotics went too far

#175

Post by [deleted] »

simgt wrote: post #136
karamanolev wrote: post #123

I work in this exact space (online grocery retailer in Europe). We're profitable and one of the few companies to be so in the sector - many online divisions are losing money and being bankrolled by the parent company with physical stores. Alternatively, burning VC money. The thing that's wrong with Ocado's technology is that it's ridiculously expensive and tailored for huge FC's (fulfillment centers). The problem wit…

Where are you operating? I live in a dense European city and I don't know a single person who orders groceries online. Smallish shops with bike racks in front of the door are simply too convenient, seems hard to beat. Next few days shopping can easily be done in 15mn on the way back home.

[deleted]

Re: Kroger acknowledges that its bet on robotics went too far

#176

Post by squeedles »

sokoloff wrote: post #168
chickory3 wrote: post #166

Earlier quoted context omitted.

> I live in a dense European city and I don't know a single person who orders groceries online. I live in the U.S. and have almost never used a service like Instacart. Also, when I see the item I’m trying to order in Amazon is fulfilled by Whole Foods, I typically don’t buy it, because of the additional cost. I’d rather suffer a small amount of inconvenience to save several dollars on groceries, and often it may mean…

Similar shopping story at our house, but I will observe that Home Depot has made amazing strides into competing with Amazon for delivery of items. They’ll ship me a $10 almost always for free and often next day, sometimes same day. And their prices are competitive in general with Amazon and supplyhouse.com. I don’t know that it’s a great (or even sustainable) offering from their business angle, but I love it as a con…

I believe that HD (and Lowes) massively subsidizes their delivery ops simply because they don't want to cede the space to Amazon. It allows them to under-stock the stores but still maintain a reasonable range of products. However each time I have ordered, they have delivered a ~$2 part via Fedex, at no extra cost to me.

They are a bigger fish than the mom and pop stores but that just means that it will take a little longer for the Amazon Prime monopoly cash flow to devour it.

Re: Kroger acknowledges that its bet on robotics went too far

#177

Post by trebligdivad »

calcifer wrote: post #120
trebligdivad wrote: post #20

I sometime use Ocado in the UK, and it's 'OK' but it's certainly not at the cheap end of the market. I more often use a traditional supermarkets home delivery service where it's manually picked; those supermarkets have the advantage of having very little infrastructure overhead in the picking - they mostly use their existing stores and pick at quiet times/over night. Ocado has to run entire warehouses just for this t…

> Ocado can only work with packed goods - not weighed vegetables for example Not quite. Packed yes, but for many vegetables they have both item count and weight-based packages, e.g. "4 potatoes" vs "1kg potatoes". I think that strikes the right balance.

Interesting, however in my case we have someone who eats a banana each day with breakfast. There's no way to buy 7 bananas in your weekly shop!

Re: Kroger acknowledges that its bet on robotics went too far

#178

Post by Mars008 »

simgt wrote: post #136
karamanolev wrote: post #123

I work in this exact space (online grocery retailer in Europe). We're profitable and one of the few companies to be so in the sector - many online divisions are losing money and being bankrolled by the parent company with physical stores. Alternatively, burning VC money. The thing that's wrong with Ocado's technology is that it's ridiculously expensive and tailored for huge FC's (fulfillment centers). The problem wit…

Where are you operating? I live in a dense European city and I don't know a single person who orders groceries online. Smallish shops with bike racks in front of the door are simply too convenient, seems hard to beat. Next few days shopping can easily be done in 15mn on the way back home.

There are old, disabled, sick who rather by online than walk. Normally I walk about a mile to grocery store several times a week. But when sick Amazon fresh or whole food is the best price/quality/time option.

Re: Kroger acknowledges that its bet on robotics went too far

#179

Post by noisy_boy »

seanmcdirmid wrote: post #39
markus_zhang wrote: post #25

I had a wonderful retro futuristic dream about an automated Costco warehouse a few weeks ago. It was one of the less weird dreams so I still remember it clearly. Basically, each section is like a closed areas with some windows. Customers order at the computers by the windows and flash their membership cards. Robots glide left and right to move 10 samples to the customer, in an arm with rotating clips. Customers can p…

Sounds like the old general store model, you didn’t browse yourself, the shop keep would bring out what you wanted, it was always behind the counter. I experienced this in China when I started visiting in 1999/early 2000s, it’s mostly not like that anymore though. You still have department stores where you need to buy things first before touching them, though.

Most of small town India is this. Small store, one person, usually owner or their family member, doing everything.

Re: Kroger acknowledges that its bet on robotics went too far

#180

Post by mapt »

roryirvine wrote: post #173
Computer0 wrote: post #172

Earlier quoted context omitted.

There is a gas station that sells candy and stale jerky, a hard, sidewalk-less 10 minutes walk from me (probably 20). Not sure it would be feasible to go anywhere else. -American

That's the thing, though - you'd think that this would result in these "heavyweight" Ocado-style home delivery options being more viable in the US than in London. And yet, they're not. Sure, you have Doordash-style same-hour options which are largely based on someone picking stuff up from a local store on your behalf (we have lots of those too). But the Ocado/Kroger robotic hive fulfilment centres ought to be more ef…

Another possibility: For perishable goods in the sort of SKU counts typically offered, it can't work unless it has a certain minimum scale. Local supermarkets supported by a largely automated (and has been for 30 years) regional distribution center have that scale from walk-in traffic. A new delivery service using high-density storage could save on real estate and labor costs on the backend, but it has to have runway to replace a lot of the local market (which may take a decade), and the whole time you're scaling, these low-velocity SKUs are literally spoiling while these expensive, high-throughput robots are mostly idle. The frontend costs of delivery are a separate category of problem.

Replacing the regional distribution center instead with even higher levels of automation, and getting your groceries delivered from the same warehouse the supermarket is, would give you the scale from the start... but then that increases your frontend delivery costs and more importantly your frontend delivery latency; High latency is a much worse thing with milk than with books or hammers.

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