Ocado Acquires 2 U.S. Robotics Firms

Ocado Group has announced the acquisition of two U.S.-based robotics companies it said will “massively” accelerate its technologies making grocery e-commerce more efficient for itself and its partners, including Kroger in the U.S.

The acquisitions—of Kindred Systems, which designs piece-picking robots that can sort items like bagged goods, and Haddington Dynamics, a designer of robotic arms that can be taught to handle them—represent advances to Ocado’s existing technologies, which are built around a system of robots enabling efficient storage and retrieval of binned goods that officials say are key to orchestrating e-commerce grocery profitably.

Ocado said it would pay $262 million for Kindred and $25 million for Haddington. The deals are scheduled to close before the end of the year.

Ocado, which operates as an e-commerce grocer in the U.K. and licenses its technologies to retailers worldwide, is in the process of building up to 20 facilities in an exclusive partnership with Kroger, the Cincinnati-based supermarket giant. The first two of these warehouses are expected to open early next year.

“We value our partnership with Ocado Group not just because of the world-leading technology they offer today but because their constant commitment to innovate and invest keeps us ahead of the game, helping us do things better, and at lower cost, so that we can offer an ever better customer experience as part of our mission to feed the human spirit,” Rodney McMullen, CEO of Kroger, said in a statement. “Today’s announcement is exciting for us because it accelerates significantly Ocado’s already impressive progress developing robotic picking. This should improve the efficiency of the flexible Ocado Smart Platform ecosystem to our benefit as well as other Ocado partners, and we welcome it.”

Ocado only weeks ago made a significant investment in Myrmex Robotics, another U.S.-based company specializing in materials handling robotics, including a novel solution to automate the process of click-and-collect for retailers. Tim Steiner, CEO of Ocado Group, said the acquisitions of Haddington and Kindred would further develop capabilities in picking and packing disparate and fragile items typical of a grocery order.

“Robotic picking groceries is such as massive challenge because of the massive variety of handling characteristics, from a bunch of grapes to a six-pack of beer, and then placing them in bags, or to be put into boxes and shipped to customers’ homes,” Steiner said in a presentation. “The bringing together of these three companies to help solve this challenge is really, really exciting.”

Ocado has been developing robotic arms to help aid grocery picking deployed at a center it runs for its own e-commerce center in the U.K., a development that has doubled the pick-and-pack speeds at its Erith, U.K., warehouse. But through the acquisition of Kindred and Haddington, “we are massively accelerating our investment and our progress in this space,” Steiner said. “This will mean our clients can roll out facilities that will have better economics.”

Kindred Systems, based in Toronto and San Francisco, designs, supplies and services sophisticated piece-picking robots for e-commerce and order fulfillment. According to Ocado, Kindred’s robots have AI-powered vision and motion control and was one of the first companies to use “deep reinforcement learning,” a form of artificial intelligence that improves the learning process of handling disparate items. Its systems are already commercialized and used by retail players in general merchandise, including Gap Inc. and American Eagle Outfitters. “This represents a large and fast-growing new segment for Ocado Group,” Ocado said.

Haddington Dynamics, based in Las Vegas, is an advanced research and development company specializing in the design and manufacture of what Ocado called “highly dextrous, lightweight, low-cost robotic arms.”

Its signature product, known as Dexter, is arm that can be taught to pick up and place a variety of items, using what is known as “force-guided robotic manipulation,” at a low cost.

“We’re absolutely thrilled to be joining Ocado Group. Five years ago we were in a garage with a vision of taking this technology worldwide,” said Todd Enerson, president of Haddington Dynamics.