AutoStore must think big and reevaluate strategy following Ocado robots feud legal showdown
Last week, British online supermarket and technology company Ocado Group won a UK high court legal action brought by Norwegian robotics firm AutoStore after a judge dismissed the latter’s patent infringement claims against the former.
AutoStore had originally asserted six patents against Ocado in October 2020.
Of these, two were invalidated by the European Patent Office before judgment was handed down, two were withdrawn by AutoStore shortly before the hearing started and the remaining two were invalidated in last week’s judgement.
AutoStore claimed that the decision had no impact on its business or operations.
Whilst that may be true, should the company take this opportunity to reevaluate its strategy?
In a LinkedIn post, Brittain Ladd, a supply chain consultant and former Amazon executive, said: “AutoStore is facing increased competition from Quicktron Robotics; arguably one of the best companies in the industry; new entrants like Intellistore; and several other companies that offer micro-fulfilment and automation solutions. For the time being, AutoStore remains the leader in the industry.”
He added: “I’m a fan of its technology but I'm concerned about its strategy. The question that needs to be asked is this - What's next for AutoStore? In my opinion, CEO Mats Hovland Vikse, CFO Bent M Skisaker, Board Chair Jim Carlisle, and Michael Kaczmarek, must reevaluate the company's strategy.”
Among the options that Ladd believes AutoStore should assess are the following:
1. Acquire Instacart to position AutoStore as the leader in automated online grocery fulfilment. Instacart serves 900 grocery retailers in the US. However, its fulfilment services are manual. AutoStore can provide the majority of grocery retailers with automated fulfilment similar to the service Ocado provides to Kroger.
Ladd says: “If AutoStore acquires Instacart, it should explore a partnership with OneRail, Fluid Truck, etc., to improve the delivery experience.”
“Note: SoftBank and THL Partners are major investors in AutoStore. They have the ability to fund an acquisition of Instacart. Note: Ocado could potentially end its exclusivity agreement with Kroger, and market their services to grocery retailers in the US.”
2. AutoStore has partnered with Amazon to pilot one of its micro-fulfilment centres (MFC) at a location on Long Island, NY.
Ladd comments: “If the pilot is successful; I have no reason to believe that it won't be, I strongly encourage Amazon to acquire AutoStore and run the company separately.”
“Instead of building hundreds if not thousands of physical stores, Amazon can leverage AutoStore's MFCs to open automated grocery fulfilment centres for online orders. Amazon can experiment with a format that would be a combined MFC and physical store.”
“Note: I recommended to Amazon to acquire Ocado in 2016. Although possible to still acquire Ocado, an acquisition of AutoStore is the best option due to Ocado’s agreement with Kroger.”
He concluded: “Does AutoStore have to make a big move? Not at all. It can maintain its same business model and play it safe. However, should it acquire Instacart to ignite its growth and eventually leapfrog Ocado? Yes. Think big, AutoStore!”
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