Self-Driving Groceries?

Remember WebVan?

Photo: Mark Coggins. Source: Wikimedia

The now-defunct grocery-delivery service has become an example of some of the excesses of the dot-com era. Executives with no experience in the grocery business were going to undercut and revolutionize how we buy groceries by offering consumers a check-the-box website and home delivery. The company was founded in 1996, went public in 1999, and declared bankruptcy in 2001. At its peak, they employed 4,400 people, had $180 million in sales, and served ten major metropolitan areas.

They failed because they spent too much too fast and went after the wrong market, a mass market that was too price sensitive. They understood algorithms and the web, but not groceries. So, they made huge capital expenditures but couldn’t scale up fast enough to become cash-flow positive. When they needed to raise more money, the bottom had fallen out of the dot-com boom.

But the idea of home delivery didn’t die. It just needed better execution. Enter Kroger, the largest supermarket chain in the US, with 2,800 stores in 35 states. They’ve recently partnered with Nuro.ai, an autonomous vehicle company founded by two Google Waymo engineers – folks who know sensors and AI and algos. Nuro is building a fleet of driverless carts that can deliver groceries while you track them on a smart-phone app, like Uber. And Kroger announced last month they’re also taking a minority stake in the UK web-shopping firm Ocado, which has awesome automated warehouses.

Source: Nuro.ai

The delivery pods are about half the size of a compact car, and look like a lunchbox on wheels, or a character from the Brave Little Toaster. They can deliver pizza, prescriptions, flowers, and all kinds of other merchandise. Just not people. And robotics and inventory management will continue to make home delivery quicker, simpler, and cheaper.

Using self-driving carts for distribution makes a lot of sense. They’re a lot more practical than drones, and it’s not like grocery shopping is our favorite thing to do. But delivering fresh meat and produce and dairy is technically challenging, and a perfect task for new and more powerful software.

This is how the future arrives: one gallon of milk at a time.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-06-29T05:23:27+00:00June 29th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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