Flexible & Low Cost Warehouse Automation: Why We Invested in Instock

Our History With Instock

Instock recently announced its latest round of funding, led by Amazon’s Industrial Innovation Fund. Since our initial investment in January of 2022, Instock has operated mainly in stealth as it has built one of the most disruptive and elegant solutions for automated order picking. Given that history, we have not discussed why we invested, and we’re excited to share our thoughts…

But before you read on…watch this short video of its robots in action, driving up walls and upside down.

The Problem: Order Picking Crushes E-Commerce Profitability (Especially in Grocery)

E-commerce penetration of the grocery market has steadily grown over time and was significantly boosted by COVID. However, the economics of grocery delivery are extremely challenging, and most grocers lose money on online orders. Retailers recently have also been strained by labor shortages that impact the quality and speed of order fulfillment. According to a study commissioned by Zebra Technologies, 60% of warehouse decision-makers report challenges with labor recruitment.

Grocery retailers must “pick and pack” a customer’s order — often taking 30 minutes or more using human labor (labor previously supplied by the customer while doing their in-person grocery shopping!). One of the most time-consuming parts of this process is locating and walking to the items that need to be picked. Multi-level goods-to-person micro-fulfillment solutions are the most obvious answer to this challenge. Utilizing robots to bring the goods directly to pickers rather than them walking to retrieve the goods can replace significant amounts of human labor and expedite the picking process.

Current Robotic Solutions Are Not Viable

Grocers and other retailers have reluctantly piloted multi-million dollar robotic solutions, but have been frustrated by the high cost, lack of flexibility, and reliability challenges.

Despite significant VC funding into micro-fulfillment robotics companies and the significant pain felt by retailers, deployments have been limited. Many grocers are reluctant to commit to multi-million dollar systems. We believe grocers are waiting for an automation solution that is low-cost, flexible, and reliable.

Companies such as Attabotics, Takeoff Technologies, and Ocado utilize robots and complicated elevator systems to pick items from multiple levels of dense micro-fulfillment centers. These systems are expensive to implement with single locations often costing more than $5M. They also have complex elevators that require precise installation and represent single points of failure for the system. These issues have limited adoption, and some of the most publicized installations have been pared back. Last year, Kroger publicly stated that they were slowing their work with Ocado.

Until Instock, no one had developed a solution that removed the complexity, cost, and reliability issues associated with elevator-based systems.

Why Instock

Prior to founding Instock in 2020, Yegor Anchishkin was the CTO of Takeoff Technologies, one of the early players in the robotics micro-fulfillment space. His specific background in the industry made him acutely aware of the drawbacks of competitors’ systems and enabled him to devise a unique solution to address the major issues existing platforms face.

In particular, he set out to build a solution that met a few key criteria:

• Superior hardware: the Achilles’ heel of existing systems is the complicated lift mechanisms (and other hardware) that must be serviced on-site. Instock does not have any moving parts bolted to the floor.
• Low-cost implementation: the system needs to be a fraction of the cost of existing solutions and be easy to install.
• Flexibility: the system needed to be modular, enabling customers to re-configure the platform after it was installed.

Yegor and the Instock team were able to achieve these goals by implementing robots that drive up walls and upside down using magnetic force. This novel approach eliminated the need for elevators, as the robots could move from level to level using ramps. It also placed all of the moving parts and intelligence in the robots. In the unlikely event that something goes wrong, the customer can simply remove the problematic robot and send it back to Instock. The system will continue to function, and no technicians would be required to be dispatched to the site.

We believe that Instock could be the key to making grocery micro-fulfillment profitable and that in the coming years, we’ll finally see large-scale rollouts of micro-fulfillment solutions.