HDS Global, the warehouse automation startup founded by entrepreneur Louis Borders, has lined up Ingram Micro Inc. as its first logistics customer.
Ingram Micro, which has started stocking consumer goods and handling online orders for major retailers like Wal-Mart Stores Inc. as it expands beyond distributing technology, is investing $10 million in HDS via a convertible note in exchange for exclusive use of the company's technology in the logistics and information technology sectors. The funding follows a $2 million investment in HDS by Toyota Motor Corp.'s North American manufacturing unit in 2015.
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HDS is developing "swarm" software that will allow different robotic systems to work together to move items through a warehouse. For example, if a customer orders two boxes of cereal, one set of robots could transport the right tray from a storage area to a station where a robotic arm would pick out the right number of packages and put them in a box for shipping. A test scheduled for later this year will involve over 100 different robots working in a single facility, Mr. Borders said.
Mr. Borders, who founded the Borders bookstore chain and Webvan, an online grocery startup that was among the most prominent casualties of the dot-com bust, said this modular approach will reduce installation expenses and make it easier to switch in new systems or expand as a retailer's needs change. He said the system, called RoboFS, could cut the cost of fulfilling orders by 40%.
"That equipment is fairly expensive today, but the price is coming down 20% a year," he said.
Online retailers and logistics companies are racing to develop robotics and other technologies to reduce the cost of picking, packing and shipping customer orders. Amazon.com Inc. acquired robotics maker Kiva in 2012, and rivals around the world are working on systems of robots and drones, ranging from towering machines that bring shelves to worker stations to smaller, mobile platforms that guide employees through aisles and carry objects across the warehouse floor.
Still, even the most sophisticated firms rely on thousands of employees to grab items off shelves and put them in boxes. With low U.S. unemployment, those workers are increasingly hard to find. Wages are rising in many countries, driving up the costs of e-commerce faster than sales for many retailers. Earlier this month, Amazon held a jobs fair to hire 50,000 people, mostly to work in its warehouses.
HDS will test its technology later this year in one of its own warehouses, Mr. Borders said. Ingram Micro, which was acquired last year by a subsidiary of Chinese conglomerate HNA Group for about $6 billion, hopes to install the system in 2019, likely in a newly built distribution center, said Ken Beyer, executive vice president for commerce and fulfillment solutions.
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(END) Dow Jones Newswires
August 15, 2017 06:14 ET (10:14 GMT)