Why did we invest in Unbox Robotics?

The obvious tailwind

As we all know, for the last 12 months, we have been shopping predominantly online. No one now questions the fundamental premise that when you order something and pay for it online - the goods can be tracked from the warehouse to your house, they more or less arrive on time and if you don't like it, you can return it. My mom trusts buying online so much that she looks at youtube live shopping videos and orders through WhatsApp; and, my dad has become so proficient at ordering from multiple grocery apps like BigBasket, BBDaily, Grofers, etc. that he even knows the time till which chat customer service is operational for each of them! I'm sure you'll have interesting anecdotes like this in your family when it comes to shopping online. A lot of this acquired behavior is not going away anytime soon.

Fragile back-end

However, when we spoke to the many leaders within the industry, we realized that the back-end that we as customers take for granted is mostly manual and therefore subject to errors. As the scale increases the errors usually tend to multiply. The fundamental problem with making a business case for automating a warehouse or sorting center in India is that, labor is very cheap and therefore the payback period for the solutions usually goes beyond 7 or 8 years. This doesn't make sense for most eCommerce players in India, therefore they have set up multiple human redundancies to ensure that it is smooth and fast. During every festive season, the contract warehouse staff are scaled up and then let go a few months later. As the online share of retail spends move from 5% to say 10% or more, we believe that this model would become unsustainable.

The roW has embraced robotics for more than a decade...

The rest of the world has embraced robotics and automation in a big way for at least a decade now. Amazon acquired Kiva Systems for $775mn in 2012, the second-largest acquisition made by Amazon at that time. This has been rebranded to Amazon Robotics and is a fully captive solution for the company. Amazon now has over 200,000 robots working in its warehouses in the US alone. Another company that embraced automation early on is Ocado; they've been building automated grocery fulfillment centers for over a decade now, both organically (through it's multiple technology development centers in Europe) and inorganically, through numerous acquisitions. Ocado has now started providing its technology for other grocery chains such as Kroger in the US and Sobeys in Canada. The company is valued at over $20bn and trades at a much higher multiple as compared to any other supermarket chain in Europe.

...but there are still gaps

Consumer expectations throughout the world have skyrocketed - primarily around the speed of delivery, return pick-ups, no minimum AOV, etc. In a study by Clutch in the US, they found out that customers who received their packages over 2-3 days were much more likely to abandon that brand/marketplace altogether from their future consideration. In the US and Europe, warehouses are typically much larger than in India are therefore usually farther away from downtown. Driven by technology, smaller distributed warehouses are now cropping up a lot in the US to enable same-day and next-day deliveries. This is definitely a one-way trend, once customers get used to this, then there's no going back, the entire industry would have to adapt very quickly; the tech needed to enable this is not something that was readily available. While Unbox Robotics was made, first for India, they were already getting a lot of inbound requests very early on, from the US and Europe; if we ever had a doubt on the possible market size, this definitely doused that.

Why Unbox?

We were convinced early on that —

• there is a strong tailwind from growth in eCommerce
• opportunity in India was very evident + other niches across the world were opening-up
• positive signals from how companies in other regions had evolved

So the only other consideration was, "Is this the right team to back?".

Pramod Ghade & Rohit Pitale were colleagues in Flipkart, as part of the Robotics & Automation team. They evaluated and led multiple projects within Flipkart which helped them understand gaps in the market and also the client's perspective. Unlike many other hardware plays where the product is built in a vacuum and then hope that consumers or enterprises find it useful; at Unbox it was a well-thought-out backward process, starting from the business use-case for the end customer. The third founder, Shahid Memom is also someone who is super passionate about this industry and holds a Masters in Autonomous Robotics Engg from Univ of York.

We had multiple conversations with the team for over six months and realized that they were dead serious about this opportunity and there was nothing else they would rather do in the prime of their careers. The founder-market-fit was very evident.

We are happy to have co-invested in their Pre-Series A round with Beenext & Red Start Labs and are looking forward to helping the company build a successful business over the next few years.