Dive Brief:

• Grocery automation startup Takeoff Technologies has partnered with Knapp, a warehouse logistics and automation solutions provider to open 50 micro fulfillment center sites across North America, according to a press release. The project will total about $150 million and is expected to process $1.5 billion of e-commerce sales per year, Takeoff Technologies' Lucia Brower said during a ProMat press conference this week. Thirteen of the sites will come online by the end of the year and the rest by the end of 2020. 
• The companies also announced a next-generation design that they say will increase output and decrease friction. One of those new elements is an open-shuttle technology that will optimize the space used for order sorting and ultimately improve the fulfillment process.
• Takeoff is also creating an "Implementation Team" that will focus on launching multiple sites per week. “By the end of 2020, Takeoff will have accumulated at least $2 billion in gross merchandise volume for our retail partners," Max Pedró, co-founder and president of Takeoff said in the press release. 

Dive Insight:

Although automated order fulfillment is still in its early stages, Boston-based Takeoff’s new initiative underscores the growing demand for cheaper, more efficient ways to get online grocery orders to customers.

The company's micro fulfillment centers, like others jockeying for retailer contracts, operate in small spaces, making them a seemingly ideal solution for dense metros and suburban markets where e-commerce demand is highest. The micro sites can also be built quickly and at a fraction of the cost of larger warehouses like those being built by Ocado and Kroger.

"Ocado takes two years to open a facility, but we do it in three months," Takeoff co-founder Max Pedro told Grocery Dive last year. "We can deploy very quickly because we’re using the underutilized space in the supermarket."

Takeoff currently operates two micro-fulfillment centers with Sedano's in Miami, and in January opened its first center in Windsor, Connecticut attached to a Stop & Shop store. The northeast retailer has said it will open “several” additional micro-sites early this year. Takeoff is also building test fulfillment centers in partnership with Albertsons.

Takeoff did not name any of the retailers it plans to work with on this latest expansion. A company spokesperson said that each fulfillment center will serve one unique retailer, and that a few companies have signed on for multiple facilities.   

Takeoff is facing some competition as retailers are toying with automated fulfillment centers with other tech companies. Kroger now has three Ocado fulfillment centers in the works and Walmart is testing the technology with Alert Innovations at one store in Salem, New Hampshire. Israel-based CommonSense Robotics, which recently completed what it called the first-ever one-hour delivery via micro site, plans to launch fulfillment centers with five major grocers across this year and next year, the company recently told Grocery Dive. 

Online grocery has been slow-growing, but micro fulfillment centers along with other innovations could help drive the growth. According to an IRI report, consumers are warming up to online grocery resulting in greater sales gains. By Dec. 30, 2018, grocery e-commerce sales totaled $58.9 billion — a 35.4% increase over the previous year.