Dive Brief:

• Ocado has acquired a minority stake in robotics startup Myrmex, the U.K.-based e-grocer and automated fulfillment technology company announced Thursday.
• Myrmex, which has offices in California and in Greece, makes automated click-and-collect systems that Ocado says integrates with its own suite of solutions. Ocado has directed the startup to develop a custom technology solution and said it plans to occupy a board seat at the company. Ocado can also participate in future finance offerings as part of the deal. 
• By teaming up with Myrmex, Ocado is expanding into the click-and-collect solutions grocers are increasingly turning to for enhanced efficiency and boosted profits. 

Dive Insight:

Founded in 2015, Myrmex has developed an automated grocery pickup system that uses shuttle robots to receive orders packed in bins inside roll cages and then ferry them to pickup points. A video on the company's website shows a customer retrieving her order at a digital terminal. Behind the scenes, Myrmex's robots push around stacks of blue totes in an intricate dance through a space that includes ambient as well as chilled rooms.

Myrmex says that its patented robotic system offers 20 times higher efficiency than traditional click-and-collect fulfillment, which primarily relies on workers picking and assembling orders. The startup announced in December 2018 that it was in talks with Ocado to roll out its pickup system, which it called “as convenient as ATM cash withdrawal,” for early trial runs. 

Automating pickup fulfillment could boost profit margins for a service that's become increasingly popular during the pandemic. For retailers, click-and-collect is already more profitable than delivery because it primarily utilizes store assets, including store workers in many cases. Although third-party companies like Instacart offer pickup services, there's evidence that grocers are moving to take more control of the process.

The funding announcement could be significant for Kroger, which has partnered with Ocado to build automated fulfillment sheds and has welcomed a flood of new customers through its pickup service over the past several months. Adding automation could make Kroger pickup more efficient. Technology like Myrmex's also opens the door to new solutions like 24/7 pickup stations and standalone facilities.

From developing robot-picking solutions to starting to build 20 planned automated consumer fulfillment centers (CFCs) with Kroger in the U.S., Ocado continues to grow its presence in the grocery e-commerce space that has boomed during the coronavirus pandemic. The company has a range of offerings, from its Ocado Smart Platform for multiple shopping channels including online, mobile apps and voice ordering to its warehouse automation system. 

In April, Ocado completed the construction of its CFC in Vaughan, Ontario — its first in North America. In June, the company announced plans to raise $1.3 billion by selling new company shares and a bond offering. At the time, Ocado said in a statement that it “believes that the COVID-19 pandemic is providing the catalyst for its existing … partners to accelerate their online delivery plans.” 

Ocado currently faces lawsuits in the U.S. and U.K. from AutoStore over its fulfillment center technology, which could impact the planned CFCs with Kroger.