E-commerce growth is driving more companies to automate their warehouses. The speed and cost savings that can be gained through robotics and automation can help offset the demands of e-commerce picking, which is both time-consuming and expensive.
Warehouse automation saw 50% growth in venture capital investment in 2020, and the global warehouse robotics sector is expected to reach $6.8 billion by 2025. Despite the increasing pressure for speed and accuracy that e-commerce has generated, 80% of warehouses are still manually operated with no supporting automation, according to DHL.
E-commerce returns are an especially vexing problem for retailers. It is estimated that as much as 30% of online orders are returned, whether that is because the customer received the wrong item or the wrong size, or just changed their mind. According to Total Retail, the average margin on an online order is 10%, but the average cost to return even one item is $15.
Robotics is the answer, according to Rudi Lueg, managing director of North America for automation company Exotec. The company has just launched a pilot program with the Gap to test its Skypod goods-to-person robotics solution on the restocking process for returns.
Lueg told Modern Shipper there is still a manual process to returns, but once an item is confirmed to be resellable, the Skypod is able to quickly and efficiently return that item to inventory.
The Skypod is a “goods-to-person” 3D robot featuring the ability to move horizontally as well as up and down on shelving racks stacked as high as 36 feet, allowing retailers and e-merchants to increase their storage capacity by up to five times, the company says.
Lueg said a robot can speed the picking process about fivefold, but when it comes to returns, that speed quickens to as much as 10 times faster. Exotec’s solution also tracks the item through the process so if an online order comes in for the item and it hasn’t been returned to stock yet, the picker is notified an item is waiting to be returned to stock so a sale is not lost.
Exotec announced a $90 million fundraising round last fall, led by 83North with participation from Dell Technologies Capital and existing investors Iris Capital and Breega. The company has approximately 250 global employees with most of its robotics solutions in use in Europe and Japan. In North America, Exotec has just five current employees, but it hopes that will soon change.
Lueg noted that returns are more complex than simple picking operations and are very labor-intensive. A worker must unbox the item, inspect it and process it, and only then can it be prepped for a return to inventory.
“The clock is ticking when the return arrives at the distribution center, and the two challenges you have in fulfillment is processing the returns, getting them back into the picking location, and hopefully getting the right item picked [for an order],” Lueg said.
The goal with the Gap test is to free up warehouse team members so they can focus on packing new orders. Gap is only testing the returns system at this time.
Lueg said Exotec is already operating its Skypod system for both order picking and returns management in Europe. The system is also highly accurate, he said, which allows it to be used in third-party fulfillment operations without fear that the wrong company’s product will be shipped to the wrong customer.