Shopify’s 6 River Systems CEOs talk Chuck robots and automation
Shopify acquired 6 River Systems for $450 million in September 2019, just three months after unveiling its Shopify Fulfillment Network, which uses machine learning to ensure timely deliveries and lower shipping costs. What did Shopify want from the fulfillment automation startup? That’s simple: 6 River Systems’ Chuck autonomous robots that can move packages in warehouses.
During the pandemic, Shopify is thriving like never before. Shelter at home orders are not only driving more people to shop online, but many are diving into starting their own ecommerce businesses. As a result, 6 Rivers Systems’ business has also taken off. We checked in with 6 River Systems co-CEOs Jerome Dubois and Rylan Hamilton to see how they’re doing. Dubois handles the commercial side and Hamilton the operational side — they like to say that Dubois is the CEO outside the four walls and Hamilton is the CEO inside the four walls. We discussed the acquisition, Chuck, automation, the pandemic, and everything in between.
After the acquisition, Shopify asked the startup to not just supply the Shopify Fulfillment Network, which opened to U.S. merchants in May, but to continue supporting existing commercial relationships. 6 River Systems licenses its technology out to some 50 logistics companies — including DHL and other big names like Office Depot, Legend Valve, and Lockheed Martin. Customers can choose to keep receiving robots and software and/or tap the Shopify Fulfillment Network to generate revenue for their business. In this way, 6 River Systems is run as an independent organization within Shopify.
Meet Chuck
Founded in 2015, 6 River Systems set out to build a collaborative solution that was, above all else, easy to deploy. The result is Chuck, a self-contained, autonomous robot now operating in over 40 facilities worldwide. The latest version, revealed in March, provides more payload capacity and harmonized safety standards, so it’s completely certified wherever you want to run it. That streamlines the company’s supply chain “significantly,” Dubois told VentureBeat.
In the first few years, 6 River Systems was known as a warehouse picking solution. It helped companies get products off the shelf, into boxes, and out the door. In the past 18 months, its capabilities have expanded on the inbound side of things — getting products onto shelves. Dubois calls the expansion a natural evolution: “Once you get the technology in the door, customers are asking us ‘Hey, this is wonderful stuff — what else can you do?’ And our response to that is ‘Well hang on, we’re building out this roadmap. Here’s more and more functionality that we’re going to provide to you over time.’ And that’s worked out quite well for us.”
“But the real work is all in the software,” Dubois said. “That software is really where the advancements are coming from, where we’re enabling these different workflows. Whereas before it was seen as a picking system, it’s now a much more comprehensive solution. And over the next few months, we’ll be making more announcements around more of a wall-to-wall capability, and that’s really where the advancements are coming from. It’s really expanding the use of not just the hardware automation but the software within the warehouses.”
Buy or rent
Chucks are working in the Shopify Fulfillment Network, but companies can also put them in their own warehouses. The minimum order is eight robots with software and integration, available for either rent or purchase. Renting eight Chucks comes to about $200,000 a year, while buying eight of the robots costs roughly $400,000, plus a recurring annual fee of about 20% (for licensing the software and maintenance). You receive the same equipment and software whether you rent or purchase. Eight Chucks can support four to five pickers doing some 5,000 units (ecommerce operations) per shift.
That’s the low end. On the high end, “we have customers with over 50 pickers using the system at once, approaching or exceeding 100 Chucks in the warehouse and doing very significant lines,” Dubois said. “We’re talking about 60,000 – 70,000 units of picking a day.”
Chuck is meant to be cost-effective, Hamilton explained: “Jerome and I come from circuits-to-person automation and mobile robotics, where those systems were not affordable to many of our customers. And then if their business changed, it was very hard for them to adjust. And so we started this company because we could actually make an affordable automation system, where instead of needing 10 to 15 mobile robots per picker you needed less than two. And the whole reason we started this was like ‘Wow, we can give a system that our customers could afford, and it’s based on a lot lower number of Chucks per installation.'”
Roadmap post-acquisition
Hamilton says 6 River Systems’ roadmap hasn’t changed as a result of the acquisition. In fact, the team “has been able to accelerate it. We don’t have to worry about raising money every two years, which is great. And we’ve been fairly autonomous in terms of just building out technology within the four walls of fulfillment centers to make our customers’ lives easier and help them do their job.”
To be fair, the roadmap is probably exactly what Shopify would want it to be.
“The vast majority of our roadmap is focused on fulfillment centers and warehouses and the clinical boring work that happens in there, which is really the lifeblood of the supply chain,” Dubois said. “But we do have some other initiatives, and we’re working with some of our customers in other places, like in the retail space and stores.”
Dubois declined to share details about the products that are “running around the stores right now.” But he did talk about the shift the team is seeing in the coronavirus era.
“There is definitely a movement toward supporting operations that are buy online, pick up at store, click-and-collect type of operations,” Dubois said. “Or even, obviously, with the shift over to a lot more ecommerce spending, there’s a lot more retail space available. People are really thinking about what to do with that space. That’s one of the areas that we’re actively exploring. We’ve been working with a couple of retailers, actually working on technology that has been used in stores to help those initiatives, make it easier to fulfill orders as more and more people choose to pick up their groceries or [items] in pharmacies or whatever it is, their day-to-day needs, to pick them up as opposed to walking around the store and doing the shopping themselves.”
The COVID-19 effect
6 River Systems seems perfectly positioned to keep up with the pace brought on by the pandemic.
“Just like Shopify, we’ve really had to think about what are our priorities and how can we ship product even faster to help our customers in this changing world,” Hamilton said. “One of the things that we’ve always believed in is the flexibility of our technology, the ability to get warehouses up and running very quickly, or to adapt to changing business needs. And so even now, our product resonates even more with our customers because we don’t have any fixed infrastructure. We can get our technology working in weeks, even with the work-from-home [measures] and shutdown. We’ve invested even more in tools to be able to support our customers remotely so we can spend less time in warehouses and get it up and running even faster. We’ve been able to support every single customer throughout the COVID-19 pandemic, and that really resonates with our customer base.”
Dubois added that the company is lucky it’s not “overly focused on retail, ecommerce, manufacturing, distribution, or whatever” across its 40 sites worldwide. “What we’ve seen is steady growth from the classic wholesale distribution market,” he said. “We’re seeing a jump in demand, near peak or above peak levels for those that were exclusively ecommerce fulfillment operations. And, of course, that coincides with a substantial decrease in those warehouses that were supporting retail stores. They were doing retail store replenishment, shipping to retail stores directly from the warehouse. We’ve seen a mixed bag, but frankly speaking, the vast majority of the customers are doing quite well. The operations are growing in terms of the volume of the business. On the commercial side of things, I think that’s indicative of what we’re seeing as consumers today. And I think that that trend is going to continue, as Rylan pointed out.”
6 River Systems is adding more fulfillment capabilities to its software, including “some pretty sophisticated work allocation” that makes things more efficient in the warehouse. If an average day is 10,000 orders and a peak day is 70,000 orders because of, say, a flash sale, the company’s software automatically adjusts to meet customer service levels.
“At the beginning of the pandemic, for some of our customers it was ‘business as usual,’ some had put a temporary halt on their operations, while others were exploring opportunities to take on new business,” a 6 River Systems spokesperson told VentureBeat. “Now, with a few months of operating in the pandemic under our belt, we can look at how our customers have been using our fulfillment solution and Chuck. The table below, pulled from historical data in our analytics solution powered by Tableau, shows 2019 mean-peak data for two sites. One of the sites has been operating above their 2019 peak levels since the beginning of the pandemic. The second site has on average 50% more daily volume compared to their 2019 off-peak days. We use this data, plus our customers’ own projections, to estimate the number of Chucks they require for a successful peak.”
More demand for automation
One of the many side effects of the pandemic is that people don’t want to work in close quarters if they can avoid it. That means demand for automation is rising even as unemployment has spiked.
“The install base continues to grow, the number of deployed systems continues to grow,” Dubois said. “And that’s because people are looking to put more and more automation in their buildings. The effect of the pandemic has actually caused an even more difficult time for the warehouse operators to source labor to work in their buildings. They are having a harder time finding people to go to work in the buildings even though unemployment is up. People are just simply worried about the pandemic. They’re taking care of their children. They are taking care of other family members. So they’re looking to put more automation in, as opposed to less, to obviously be able to support their service levels and the volumes that are being placed on them.”
6 River Systems has been able to keep up with increasing demand, but not without making adjustments.
“We’ve had to be creative,” Hamilton said. “And our customers have raised their hands and said ‘Hey, instead of sending deployment engineers from the East Coast to a West Coast facility, maybe we can actually do some of the work ourselves and do some of the installation.’ And we have engineers out of their homes and helping them do the mapping and other parts to set up the systems. We also have partners all over the world that we’ve leveraged so people don’t need to travel and get onto planes. We have local people in those areas — we’ve been leveraging them to do the work to either set up new customer sites or support them with existing operations. But it’s definitely — I think it has tested all of us.”
Robots and social distancing
More automation doesn’t mean no humans are working at the warehouses. In addition to helping humans directly, Chucks can also help keep them safe.
“Recently, we actually came up with kits for customers to help them with social distancing and to make our systems even safer to use,” Hamilton said. “They can add accessories or wipes or whatever type of sanitizers on the robots so people can be safe. Those are little things that we can do. And then we’ve also set out guidance for how our customers can use the entire system. One of the nice parts about our system is Chuck can do all the walking between different zones so people can stay separate. Our customers, many of them do essential work, so while many people are sitting at home ordering online, our customers have to make sure that these warehouses are up and running so the economy can work.”
“This alludes to what I said earlier with respect to our customers looking to put more technology in the buildings, because of this lack of labor and because they want to protect their associates,” Dubois added. “So now you expand out the footprint and the years of the automation, not just for picking, but now for things like replenishment work or for put-away. Other areas of functionality that we normally wouldn’t have deployed the technology in over the last year or so, this has just really accelerated that deployment of those technologies to again really help with social distancing and safe operations somewhere else.”
