Dive Brief:

• Ocado is spending $287 million to purchase North America-based robotics specialists Kindred Systems and Haddington Dynamics in an effort to improve the efficiency of the automated grocery-picking facilities it builds, according to an announcement from the U.K.-based e-commerce company.
• Kindred Systems develops robots that use artificial intelligence-powered vision and motion control to distinguish between items, while Haddington Dynamics focuses on the development of low-cost robot arms.
• ​Ocado is beefing up its capabilities ahead of the expected opening early next year of the first automated fulfillment centers it is building for Kroger under an exclusive arrangement.

Dive Insight:

Ocado is investing in its robotics prowess as supermarket companies around the world evaluate a range of online fulfillment solutions. The company said the expertise it is adding to its portfolio will make it less expensive to operate not only the large warehouses it specializes in, known as customer fulfillment centers (CFCs), but also smaller micro-fulfillment centers.

Ocado’s CEO, Tim Steiner, noted that the firm has made “meaningful progress” in developing the picking technology that serves at the heart of the large automated warehouses it builds. For instance, it has already doubled the rate at which the robotic arms at the five picking stations in its CFC in Erith, U.K., can pick and pack, according to Monday's announcement. 

Still, Ocado said it has plenty of room to improve the machine learning, computer vision and engineering systems it relies on. By purchasing Kindred Systems and Haddington Dynamics, “we are massively accelerating our investment and our progress in this space,” Steiner said.

Kindred Systems, for which Ocado is paying $262 million, will help Ocado speed up the commercial delivery of the robotic-picking systems it is building for customers like Kroger, Ocado said in a presentation posted on its website. Ocado’s $25 million investment to pick up Haddington Dynamics, meanwhile, will give Ocado access to that company’s expertise in developing low-cost robotic arms described as ideal for grocery picking. Haddington has worked with customers including NASA, the European Space Agency and DuPont, according to the firm's website.

Kroger, which bought a minority stake in Ocado as part of its agreement to use Ocado technology in fulfillment centers, indicated that it is supportive of Ocado’s acquisition of the two robotics companies.

“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,” Rodney McMullen, Kroger’s chairman and CEO, said in a statement Ocado included in its presentation.

As it builds out its robotics systems, Ocado also faces lawsuits from rival grocery automation company AutoStore, which contends that the technology that lies behind the rolling robots that traverse Ocado’s robotic warehouses infringes on its patents.