The trend of warehouse automation has begun, but is it really becoming "rational"?

In January 2003, Mick Mountz established Kiva System. In the first few years, Kiva robots were not very popular and were even an imaginary product for most people. At that time, Kiva would not have thought that it would be acquired by the international e-commerce company Amazon nine years later. In 2012, Amazon acquired Kiva System for US$775 million and reorganized it into its robotics division, Amazon Robotics.

This move is more or less responsible for the popularity of warehouse automation in China in recent years.

As we all know, the proportion of warehousing costs in China's GDP is about 8%, while the figure in the United States is between 2.5% and 3%. Since logistics itself is not a profit center but a cost department, profits are earned by continuously reducing costs, and the huge cost reduction space of warehouses is waiting for companies to continue to explore. With the Kiva blueprint in front and the benefits of cost reduction and efficiency increase behind, Kiva-like robot companies in the warehousing field in China have continued to emerge since 2012.

Warehouse automation is on the rise

With the emergence of new trends, capital's sense of smell may be sharper than anyone else's. There is a set of data to prove this. According to data from market research firm Tractica, investment in warehousing and logistics automation is expected to climb from US$8.3 billion in 2018 to US$30.8 billion by 2022.

The special favor of capital has enabled this industry to grow rapidly. In the field of warehouse robots alone, there are countless leading companies that have completed several rounds of financing.

From 2013 to 2017, there were constant news about the establishment of smart warehousing companies, and many companies took advantage of this trend and developed rapidly. The situation at that time can be described by Cao Shuyang, the founder of Malu Innovation: warehousing industry giants, high-end manufacturing companies, listed companies, and startups are all doing this. On the one hand, everyone is educating the market, and on the other hand, they are staking out their territory in e-commerce retail, medical services, and the automotive industry, and collecting cases.

The hotness of the industry can also be confirmed by the pursuit of capital. From the above table, we can see that companies established after 2013 have generally completed more than 2 rounds of financing. Faster-growing companies have completed more than 4 rounds of financing, or have been acquired, or have been listed on the New Third Board. For example, Geek+ and Quicktron, although not established early, have completed 6 rounds of financing. In November 2018, Geek+ completed a $150 million Series B financing, which set a record for the highest round of financing in the global logistics robot at the time.

In addition to enterprises and investors, the national policy of "adding fuel to the fire" has added fuel to the field of warehouse automation.

Since 2009, the country has begun to introduce a series of policies on smart logistics. Among various emerging technologies, the Internet of Things was first applied in the warehousing field. Since then, wireless radio frequency, QR code barcode technology, and automated handling tools have "blossomed everywhere" in the warehousing field.

The increased involvement of various companies, the investors' quick response, and the "icing on the cake" of policy dividends have made the warehouse automation industry really "hot".

According to data from the CITIC Consulting Industry Research Center, the scale of investment in automation systems and equipment related to the warehousing industry increased from 2.5 billion yuan in 2007 to 45.3 billion yuan in 2015, with an average annual compound growth rate of approximately 43.64%. From 2013 to 2016, the growth rate of my country's automated warehousing systems has exceeded that of industrial automation.

After its heyday, will smart warehousing become rational?

There are ancient sayings such as "the moon waxes and wanes" and "everything that rises must decline". This theory can also be applied to today's new technologies and new things.

Compared with the fast financing speed and high financing amount in previous years, smart warehousing has obviously entered a cooling-off period in the past two years. The number of companies established during this period is far less frequent than before. From an investment perspective, even if the establishment time factor is put aside, most companies are in the angel round and A round of financing.

The Sino-German Doctoral Institute of Intelligent Technology believes that new technologies go through five stages from being triggered to being practical, namely the new technology trigger point, excessive expectations, the trough of disappointment, rekindling hope, and the peak of practicality. This can explain the cooling of smart warehousing to a certain extent. Because new technologies themselves have a "propaganda effect", with the involvement of enterprises and media reports, the functions of the technology are inevitably exaggerated.

In addition, the entry barrier of the warehousing field itself is not very high. Enterprises often implement warehousing and distribution integration to reduce costs. In addition, the direction of the supply chain is becoming increasingly obvious. The business flow, logistics flow, capital flow and information flow are integrated. Warehousing plays an increasingly important role in it, which leads to more and more companies entering the market. However, it is easy to enter the market but difficult to grow it. It is not easy to apply the warehousing industry on a large scale. This leads to some companies entering the market and stopping at the first try. They come and go in a hurry.

In practical applications, the cost of smart warehousing is still an unavoidable topic. Ultimately, it is a question of whether it is cost-effective to replace manual labor with robots.

There are currently two mainstream navigation methods on the market. One is to lay QR codes on the ground for positioning, and the robot can move to the exact location based on the QR code; machines with higher requirements use SLAM navigation, with laser radar installed inside the machine, using visual technology to achieve object recognition, navigation and other functions. Of course, mixing the two technologies together is also a solution.

Considering the cost reasons, most domestic warehouses currently use QR code positioning method. The cost often limits the flexibility of the machine, and the low flexibility leads to the low application level of intelligent warehousing.

Finally, it is worth mentioning that the competitive environment of the entire industry still needs to be optimized. Any company has and needs to have its own core competitiveness. When technology cannot occupy a place in competitiveness, then a simple and direct "price war" will take advantage of the situation, eventually leading to a cycle of "bad money driving out good money."

Warehouse automation has clearly reached an inflection point. After the inflection point, it is time for the technology to be truly implemented.

According to market consulting and research firm Tractica, global warehouse and logistics robot shipments will surge from 40,000 in 2016 to 620,000 by 2021. At the same time, the industry's market revenue will grow from $1.9 billion in 2016 to $22.4 billion.

As Cao Shuyang said, the current scale of warehouse automation is very low and is far from saturation, especially in e-commerce warehousing, where the automation penetration rate is less than 1%. After the boom, the bubble of warehouse automation should gradually subside. With the arrival of the actual application period of technology, a new round of market is also waiting for many companies to explore.