The Meteoric Rise of E-commerce | Arvig Blog
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The Meteoric Rise of E-commerce

A Look at the Robots that Support Online Shopping

Adding more robots might be key to keeping pace with the massive growth in online purchases.

A global boom in e-commerce was already well underway before the COVID-19 pandemic. In the U.S. alone, ecommerce sales are expected to surpass $740 billion by 2023. Some verticals in online shopping took a pandemic fueled uptick, like medical supplies, baby products, food and beverage, cleaning supplies and work from home gear. There has been a shift in buying habits, such as clothing, which had been a primary sales category, dipping into negative growth. But overall, the pandemic has kept e-commerce on track with projected industry growth. This is leaving warehouses scrambling to apply more robotics, automation and advanced logistical software to fulfill every shopper’s needs.

Just to put things in perspective, e-commerce represented 14.1 % of global retail sales in 2019, and will make up 22% by 2023. The growth is attributed to many factors, including increased use of smartphones and mobile shopping, buying through social media and technology that has transformed online marketplaces and fulfillment.

Today, getting goods from origin to destination encompasses all manner of robots, drones, and autonomous vehicles. This includes the more recent addition of robotic solutions to address the “last mile,” in getting packages to your door.

Robotic advancements
Artificial Intelligence (AI), the Internet of Things (IoT) and blockchain are working together in e-commerce supply chain logistics, enabling a fundamental transformation in business models.

As more roles for robots are introduced, advances in AI are fostering a new breed of ‘intelligent’ robots that not only automate warehouses, but can talk to each other. Even though smarter, don’t envision these bots in human form. They may be a self-driving pallet and forklift mechanism, capable of picking up entire shelves of products and delivering them to packing stations in different areas of a warehouse. Accidents are avoided by sensors that prevent collisions. Greater efficiency can be achieved by a bot using an algorithm in its computer brain to determine where the closest supply of an item is.

Some warehouses are also experimenting with special robots with nimble mechanical arms for speed-sorting. The bot sorts and packages a parcel based on size, weight and dimensions. Meanwhile, another type of self-driving bot assists in receiving, unloading and delivering supplies around the warehouse with sophisticated navigation.

Big U.S. companies such as Walmart and Amazon rely heavily on robots. In fact, Amazon bought robotic company, Kiva Systems, in 2012. It has since deployed more than 100,000 robots in Amazon warehouses worldwide. But it is Chinese company, Mujin, that has developed the first fully robotic warehouse for e-commerce giant JD.com. Instead of 400 to 500 workers that would have been needed to run JD.com’s over 400,000 square-foot. warehouse, it needs only five square feet. Those jobs are to service the machines, not run operations.

Sophisticated software integrates end-to-end solutions from ordering to delivery and returns. As processes become more automated and productivity increases, costs are reduced. This efficiency will not only address the higher volumes of online sales, but also ensures data is automatically accessible and ready to integrate with the rest of the business.

Shopping cart full of boxes on a laptop

E-commerce drones
Drones are unmanned aerial vehicles, which can be operated with different levels of autonomy. E-commerce drones typically carry lightweight and inexpensive packages such as food, beverages and medical supplies. Drones are especially useful in urban areas, easily navigating through congested streets for quick deliveries.

Development of autonomous drone technology is rapidly expanding, and is anticipated to grow the global drone package delivery market further. According to the newly released report Drone Package Delivery Market By Solution from Facts and Factors, the e-commerce drone market was estimated at $530 million in 2019 and is expected to reach $6,051 million by 2026.

Autonomous last-mile delivery
Imagine a driverless delivery van pulling up in front of your house. A high-tech door whooshes open when you enter a code from your cell phone, and dispatches a hot pizza or some groceries from its cargo hold. Something like it is already in practice in Houston, through a partnership between Domino’s pizza and autonomous car provider Nuro. The company can deliver hot Domino’s pies to hungry college students or even a bag of groceries ordered online through Kroger.

The potential and demand for autonomous or semi-autonomous delivery to homes and businesses for all channels of e-commerce is immense. Why? Because this is where the bulk of delivery costs lie. A McKinsey & Co. report put these last-mile delivery costs at over $86 billion per year. Because of demand to reduce costs, the company predicted that autonomous vehicles will comprise 85% of last-mile deliveries by 2025.

It’s no surprise that Amazon has been working on its own autonomous vehicle technology projects, including last-mile delivery robots, which look like a high-tech cooler on six all-terrain wheels. These bots are dispatched from a delivery vehicle and are diminutive enough to cruise sidewalks, carrying small packages to customer’s homes.

Amazon has also invested in autonomous driving startup Aurora, and it has tested self-driving trucks powered by autonomous freight startup Embark. In June, Amazon purchased autonomous vehicle company Zook. Some industry pundits are theorizing these purchases and partnerships will be incorporated into Amazon’s last-mile delivery plans.

The human factor
Robots are more cost effective to maintain than their human counterparts. Robots do not require vacation time, pay increases, sick days, paid leave, lunch breaks or health insurance. Larger online retailers can reduce operational and logistical costs while potentially decreasing delivery time.

It’s likely that robots will increasingly replace some roles currently filled by human workers, but it will not happen overnight. For one thing, the cost efficiency comes at a large scale, leaving medium to small retailers still reliant on humans. Also, some major players like Amazon are seeing where displaced workers could be reallocated.

In 2019, Amazon announced it was incorporating new machines in several of its U.S. warehouses to scan and box items to be sent to customers. According to Reuters, the move meant replacing at least 24 jobs at each installation location with robots. That would translate to over 1,300 employees if installed in all of Amazon’s 55 US fulfillment centers.

However, Amazon is deleting these jobs through attrition as people leave a packaging job. Amazon is also looking to shift some of its workforce out of the warehouse and into the “last mile.” The company offered employees $10,000 each to quit their jobs and set up their own delivery businesses as part of its Delivery Service Partners program.

Disadvantages of automated e-commerce warehouses
At about $35,000 for just one warehouse robot, comprehensive automation is unattainable for smaller retailers. Until e-commerce reaches a certain volume, the high cost of automation versus human employee salaries, perks and benefits creates a barrier in applying technology like automated warehouse control and material handling systems.

Losing jobs is also a major concern across the U.S. Labor unions, and other employee groups are not keen on the trend of losing jobs to automation. But the fact remains, robots will continue to expand in business, starting with replacing humans who perform basic repetitive tasks.

Rise of the bots
Robots, in all their shapes, intelligence and functions, are viewed by many as the key to gaining a competitive edge in the e-commerce market. While big e-commerce retailers are vying to keep up with current global trends, cost of equipment and technology likely will become affordable for more companies. On the consumer side, delivery speed will improve and hopefully prices will be contained as last-mile costs are reduced. Today’s ‘smart’ robots are reducing the time and effort it takes to fulfill warehouse roles, and could be rolling up to your door soon to deliver a package to your human hands from its robotic arms.

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