Readit Newsdeja-vu from the e-scooter business. even with a good product, its just not profitable/scalable enough
This has been solved by Pio (by AutoStore)
I think scaling up would be the only way out of this problem. Scaling down only makes it worse.
The margins are thin, but not as razor thin as you might think. The grocery stores have a lot of overhead that we don't. Additionally, people realize that not only is that the case, but they also save from their own costs - just driving to the store is not free, let alone the time you spend, which is massively cut down.
This contrasts sharply with being an innovator in the robotics space, which typically is extremely capital intensive with very long ROI trajectories.
I think the big win with that model vs Ocado is that scaling down is fine, you work with whatever shops are in the area and don't need to deal with building fulfilment centres. Maybe you need a car park somewhere to put the vans overnight. Scaling up is a case of moving into different areas, or onboarding new shops. Absolutely agreed that last mile is a nightmare but we mostly had it down I think, the biggest pain there was that we were relying on a bunch of third parties to pack an order, and if any of them got something wrong we ended up with an unhappy customer on the phone and needing to deal with it.
The thing that's wrong with Ocado's technology is that it's ridiculously expensive and tailored for huge FC's (fulfillment centers). The problem with that is that it needs to serve a large population base to be effective and that's hard - in dense metros, the driving times are much longer despite smaller distances. In sparse metros, the distances are just too long. In our experience, the optimal FC size is 5-10K orders/day, maybe up to 20K/day in certain cases, but the core technology should certainly scale down profitably to 3-5K. Ocado solves for scaling up, what needs to be solved is actually scaling down.
There are a lot of logistical challenges outside the FC, especially last mile and you need to see the system as a whole, not just optimize one part to the detriment of all others.