Shopify suffers enormous loss on 6 River Methods sale

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6 River Methods’ Chuch autonomous cellular robots. | Supply: 6 River Methods

When Shopify bought 6 River Methods, many assumed Ocado paid pennies on the greenback to amass the autonomous cellular robotic (AMR) maker. Now we all know precisely how good of a deal Ocado bought.

In its 2023 mid-year monetary report, Ocado stated it paid simply $12.7 million to amass 6 River Methods. For comparability, Shopify paid $450 million to amass 6 River Methods in September 2019. Ocado paid roughly 2.8% of what Shopify paid for six River.

Ocado stated the 6 River enterprise “has a great shopper record, is debt-free, money move optimistic, and generates optimistic EBITDA.” I’m no mathematician, however taking a $437.3 million loss can’t be good, even in the event you’re making an attempt to dump a enterprise that’s now not a part of future plans to chop prices.

Based in 2015, 6 River Methods builds AMRs for the logistics and non-grocery retail sectors. The AMRs present automated help to human pickers in a warehouse, working collaboratively with them. In response to Ocado’s monetary report, at press time, 6 Rivers’ Chuck AMRs had been deployed in additional than 100 warehouses worldwide,
with greater than 70 prospects.

Primarily based in Massachusetts, 6 River Methods was based by Rylan Hamilton, Jerome Dubois and Chris Cacioppo, who’ve deep information of robotics, software program and success operations. Dubois and Hamilton are former staff of Kiva Methods, the well-known AGV maker acquired by Amazon in 2012 for $775 million.

Rising robotics portfolio

6 River will change into a part of Ocado’s Clever Automation (OIA) division. Ocado stated OIA was established to convey Ocado’s automation applied sciences to shoppers outdoors grocery. OIA will function a capital-light materials dealing with tools gross sales mannequin designed in order that upfront charges higher match Ocado’s money outflows and can largely leverage present OSP expertise. Ocado stated discussions have progressed with a number of potential shoppers throughout a spread of industries.

The 6 River acquisition additionally provides a brand new kind of robotic – AMRs – to Ocado’s portfolio. The corporate has developed its personal automated storage and retrieval system (ASRS) for years for its on-line grocery enterprise. Ocado not too long ago received a lawsuit towards fellow ASRS developer AutoStore, wherein AutoStore should pay Ocado a $256 million settlement over the following two years.

In 2020, Ocado acquired two U.S.-based robotics firms for $287 million. It bought San Francisco-based Kindred Methods, which focuses on robotic piece-picking, for about $262 million and Las Vegas-based Haddington Dynamics, a developer of low-cost robotic arms, for about $25 million. Ocado stated the acquisitions will allow it to enter new robotics markets outdoors of grocery.

Pulling all of it collectively

I not too long ago spoke to an investor who was concerned in promoting a robotics firm to Ocado. This investor, who wished to stay nameless, stated the 6 River acquisition makes strategic sense for Ocado, however that it’ll take time for the plan to return collectively.

“Ocado doesn’t care concerning the $40-50 million in yearly income that 6 River’s AMRs produce,” the investor stated. “Ocado desires to have the ability to provide Kroger’s and others a soup-to-nuts resolution. However every of these programs – 6 River’s AMRs, Kindred’s piece-picking robots and Ocado’s ASRS – had been initially designed for various finish markets.”

One supply advised The Robotic Report “the entire 6 River Methods robotics group was axed” earlier than the acquisition by Ocado. Certainly Ocado has engineers who can look underneath the hood of 6 River’s AMRs and make sense of all of it. However it is going to probably be a very long time earlier than Ocado’s robotics platforms will all work seamlessly collectively.