Bob Trebilcock: Welcome to The Rebound, where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Eshkenazi, CEO of the Association for Supply Chain Management and Bob Trebilcock, editorial director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now, to today's episode. Welcome to today's episode of The Rebound. Yes, there's a store for that or how Robomart plans to reinvent retail. I'm Bob Trebilcock.
Abe Eshkenazi: I'm Abe Eshkenazi.
Bob: Joining us today is Ali Ahmed. Ali is one of the co-founders of Robomart. It's a very different take on the retail store and final mile delivery experience. Ali, welcome.
Ali Ahmed: Hi, thank you so much for having me.
Bob: Well, thanks for joining us today. We're really excited to talk about this. Some of you may remember the podcast we did in 2021 with Yossi Sheffi on The New Abnormal. One of Yossi's contentions was that in the future, business models and the supply chains that support them need to and will change to adapt to whatever it is that we're going to call the new normal. This podcast is a little different. Normally, we've got supply chain practitioners on who are going to directly talk about the supply chain management in their organizations.
This one doesn't directly touch on supply chain management, at least as we currently think of it. After the first time I interviewed Ali, I thought what he and his partner are attempting at Robomart is an example of Yossi's new business models to address new demands. If they're successful, it will lead to new supply chain models. That's what we wanted to talk about today. Ali, I think the starting point is to just explain for our listeners, the store-hailing concept behind Robomart and really, how you and your partner came up with the idea.
Ali: Absolutely, Bob. What we've created at Robomart is the fastest delivery service on earth, by delivering the store instead of goods. The way it works is you tap a button to hail a mini mart on wheels. When it arrives, you get to shop checkout-free, right at your doorstep for all your essentials in as little as two minutes. We came up with the idea about 14 years ago. My co-founder, Emad, and I used to work at Unilever. He was in the ice cream division. He wanted to recreate the ice cream van for everything else in retail, but have it be on-demand.
As you can imagine, it was just way too early back then. We sat on the idea, I got into on-demand delivery, Emad continued in food retailing. After experiencing the ins and outs of on-demand delivery, I moved to the US and got back in touch with him. We connected that old idea that we had and realized that the best way to solve all the problems of delivery is by delivering the store instead of goods. That way we've done away with the entire basket and order creation and we don't have order pick up. We'll always be twice as fast as any delivery service.
Abe: Ali, that's really interesting, when you identify the benefit of it, obviously speed the benefit in the ordering. There are a number of other services out there. Give me a sense of how it works from the consumer's point-of-view. How many stores or retail models and what your inventory looks like in terms of, when do I make a purchase? Is there a fixed inventory? Give me a sense of the product mix.
Ali: Absolutely, yes. First I'll tell you about the consumer experience, then I'll tell you a little bit more about the products on the Robomarts. Consumers will use the Robomart app to hail a storefront. Because we're a marketplace, we're now allowing retailers big and small to deploy their own branded Robomarts to consumers. You'd pick the storefront in the app and you'd hail it, much like you would an Uber or Lyft.
You're not creating a basket, you're not ordering goods, you're just tapping one button. When it arrives, it sends you a notification that it's outside, it'll show up in a few minutes. You head outside, you unlock the door through the app, the doors open automatically. We start tracking your shopping engagement and you don't have to pull out your credit card, you don't have to scan any items, you just grab what you want and go, we automatically charge your card on file and send you a receipt within a minute.
We've started with two Robomart types in June of last year, the pharmacy and snacks Robomarts that are operating in West Hollywood. The snacks has a full selection of chips, ice-cold drinks, candies, and chocolates. The pharmacy Robomart has OTC medicines, personal care items, household goods, a very full selection within each category. We're now introducing a number of new categories that merchants can book and deploy, including the grocery Robomart, the café Robomart, which will have a selection of ready-to-heat and ready-to-eat items and the ice cream Robomart, which is a very exciting one that's dear to us.
Bob: Ali, I've got a question here in a second. Just a follow-up on what Abe asked, when you mentioned that a consumer doesn't have to enter their order, doesn't have to create a basket, you're going to track their shopping experiences or shopping. What's the technology behind that? First, monitoring the inventory in whatever mart you're doing. Second, how do you know what I purchased or what I put into my basket?
Ali: Absolutely, yes. We've created a proprietary, now patented, checkout-free shopping system that tracks everything using RFID. Products are tagged, as customers grab products out of the Robomart, when the doors open, we start tracking their shopping engagement, when the doors close, and the Robomart leaves, we end their shopping engagement. What they've taken is effectively their basket. The real beauty of the model is that they get to physically shop for products right at their doorstep.
Bob: When you and I first talked, I told you I was fascinated by the concept because I'd just come back from this trip where I saw a completely automated Hudson News at Midway Airport in Chicago. When I got to New Hampshire, I went to my local McDonald's and it was nearly completely automated, in terms of how I experienced and got my order. Your model fascinated me as well, but it also begs the question, does the world really need all these formats? If so, why?
Ali: That's a great question, also, Bob. Convenience always wins. Any technology that makes things more convenient or faster for consumers is poised to win. What we've realized is that we're creating convenience not only by creating a model that is faster than any other delivery service today, but it also increases accessibility. When you think about retailers, what they can currently do, if they want to get into a new market, they have to invest a significant amount of capital to create a new store. Robomart offers them mobile storefronts, where they can quickly enter into a market or in markets where they already have a presence, they want to expand their reach, Robomarts give them physical shopping experience that their consumers can tap into. There's never really been anything like it.
Abe: Ali, let's talk a little bit about what happens next, the locations that you're operating in, and some of the limitations. Do you have limitations based on geography or last-mile delivery or products? Where do you see expansion and where do you see some of the limitations?
Ali: That's a great question, Abe. For us, we're currently operating in West Hollywood and Hollywood. That's our first operating zone. We're now gearing up to expand across all of LA and we'll slowly unlock new markets on the East Coast, then the rest of the US. It will also be driven in part by the merchants joining our platform. Where they want to deploy, we can very easily replicate our operating model and set up operations for them in that city. It's going to be an aggressive expansion plan, I don't see any limiting factors there. We are being very careful in how we curate the selection and the Robomart types.
We've had a tremendous amount of interest from apparel companies and sporting goods companies. I love the idea of expanding to any retail category which we will do in the future. In the early days, we are focusing on essentials that consumers need in as fast a time as possible. That includes the categories that I've outlined earlier. As we grow, we can then expand the repertoire of products that are on offer for consumers.
Bob: I'm waiting for the beer mart or the wine and spirits mart.
Ali: That'd be a very good one, yes.
Bob: Yes, exactly. One of the things I've mentioned at the start is this currently isn't a supply chain story as we may currently think about supply chain. When you talk about your expansion, you start expanding into different geographies, expanding the vans or expanding into different brands, all of a sudden, there's going to be an inventory management issue. The last thing you want is out of stocks, that's the killer of any retailer. Tell me first, in your current setup, do you have real-time view into inventory on a Robomart out in the field, and how do you imagine your supply chain working as you start getting more marts out there or again, working with the different brands, like if you're doing an apparel mart?
Ali: For us, supply chain is at the heart of what we do, so we've built the entire back end to manage inventory. What's really fascinating about our model is that we give merchants visibility into their products throughout their entire lifecycle, which they don't have in any other mode of distribution today. First, we offer them a turnkey solution. We operate and restock Robomarts from our restocking stations, they deliver their goods to the restocking stations on a set schedule. The moment they come into the station, we start tracking them.
They can see at any point in time if they're being stored inside the station, if they're currently inside a Robomart, or if they've been sold. You talk about a problem, but I'll talk about another industry. CPG brands. My co-founder and I have a lot of experience in CPG. What's really fascinating is that this is a very interesting supply chain story for them. A lot of brands have been excited about the prospect of Robomart, because it creates a new direct-to-consumer channel for them.
The direct to consumer play is something that we've been hearing about for several years but it's not really been something that's taken off in a meaningful way, but with Robomart, manufacturers, brands, wholesalers, are now able to tap into a new channel, store-hail, that allows them to get their products to consumers in the fastest possible way, with the fewest middlemen.
Abe: Ali, really interesting when you're talking about servicing the customer. Obviously, the customers are very accustomed to just in time, high variety, rapid delivery, reasonable cost. When you take a look at your business model and the last mile delivery solutions, do you need to focus on urban distribution centers? What are the factors that make the Robomart a very successful location or product or relationship? Give me what your key success factors are?
Ali: Yes, for merchants, it is a model that gives them up to 500% increased deliveries and they don't have any of the operating cost. It's a very win-win model that we've created for consumers because they're only paying a small hailing fee to hail a Robomart. They don't tip anyone because there's no interaction with the driver. For us, it's a very profitable model because of the multiple revenue streams that we have coming in.
For our merchants, the retailers, it's extremely profitable because of the sheer number of orders they can do per hour. At scale, they can do more orders than delivery can even give them in any meaningful way. Orders are magnitude more. They don't have any of the operating costs involved, so we take care of all that for the retailer. It's a very, very profitable model for retailers. Yes, it's a model that's a win-win for all parties involved.
Abe: Ali, really interesting and innovative solution to a local problem. We'll be watching this as it expands into different locations as well as the different products. Really interesting information. That is all the time that we have today. A special thanks to our guest, Ali Ahmed, from Robomart. Finally, a special thanks to you for joining us on this episode of The Rebound. We hope you'll be with us for our next episode. For The Rebound, I'm Abe Eshkenazi.
Bob: I'm Bob Trebilcock.
Abe: All the best, everyone. Thank you again, Ali.
Ali: Thank you guys. Thank you so much.
Bob: The Rebound is a joint production of the Association for Supply Chain Management and Supply Chain Management Review. For more information, be sure to visit ascm.org and scmr.com. We hope you'll join us again.