On SoftBank, SPACs, Grocery Stores, and Amazon
Key takeaways
Softbank, an early investor in key categories, has geared up investments in Robotics
Seeing that the gaps in robotics are more than money, Softbank announced their Systems Integrator strategy to help solve hardware, software, and knowledge challenges
In order to build out capital expenditure projects, businesses need customer demand. Amazon has achieved this with AWS and ‘Buy with Prime’. Softbank is doing this by buying up and merging grocery store chains
Amazon is creating its AWS of eCommerce fulfillment; Softbank can do this for grocery order and fulfillment
This could squeeze out robotics startups and affect high volume hiring in the long term
Masayoshi Son, early visionary, willing to ride the volatility of technology
Depending on who you ask, and perhaps when you ask, Masayoshi Son, CEO of SoftBank, is either an extraordinary investor or someone who's made monumental financial missteps. A prime example of the "power law of investing,"1 Son once had the dubious honor of losing more money than any other investor in history. And yet, his early investments in Yahoo!, Alibaba, ByteDance (the parent company of TikTok), Uber, and others, have been transformative.
SoftBank, under Son's direction, focuses on long-term investment trends, or what some may call "super cycles."2 These cycles include innovations in the internet, telecommunications, mobile tech, GPUs, and robotics. Companies like AutoStore, Berkshire Grey, Fetch Robotics, Right Hand Robotics, and Symbiotic have all been beneficiaries of SoftBank's investment. Furthermore, SoftBank not only invested in Berkshire Grey and Symbiotic but also took them public via SPACs, even recently taking Berkshire Grey private again.
Kroger-Albertsons: A forward looking Grocer
Given this trajectory, news that SoftBank is in talks to acquire Kroger-Albertsons3—a major U.S. grocery chain—might raise eyebrows. After all, the grocery sector isn't generally seen as a hub of technological innovation. Two things clarify why Softbank would want to own Kroger.
Softbank’s System Integrator Strategy
Kroger-Alberton’s is an early customer of Ocado’s grocery distribution center robotics technology4
Softbank’s System Integrator Strategy
Before diving into SoftBank's plans, let's set the stage with an overview of the robotics industry. According to the CEO of Polymath Robotics, the robotics sector today is akin to the computer industry of the 1980s. While modern software offers a myriad of microservices, frameworks, and APIs that make building new software relatively easy—even for a non-technical person—the same situation is yet to take hold in robotics.
Standardization in general, is not at the same level in robotics as in software, either. As in the earlier days of computers, system integrators, that ensure all computer and software can connect, perform a similar function with robotics.
Softbank Robotics group announced the system integrators strategy in October of last year.5
Kroger, Ocado, and Technology
Ocado is a UK-based online grocery and robot system supplier. They first announced a deal with Kroger in 2018, explaining that Kroger was best placed to grow in the US market. Since then, Kroger and Ocado have continued to expand their partnership.
Kroger’s partnership with Ocado is exclusive, with plans to replicate 30 fulfillment center’s worth of robotics and includes instore fulfillment that enables curbside pickup.
Exclusive contracts make it challenging for competitors to sell into Kroger. Buying Kroger presents one way around that challenge.
Kroger distribution center with a new fulfillment system from Symbiotic rival Ocado
The Symbiotic Relationship with Symbiotic
The robotics industry is indeed growing, with clothing retailers, third-party logistics providers (3PLs), and other sectors looking to scale operations amidst rising consumer demand and labor shortages. Here, companies like Ocado and Symbiotic (led by the CEO of C&S Wholesalers) stand out for vertically integrating retail storefronts with logistic backends, while also offering robotic order fulfillment systems.
Symbiotic's primary customer is Walmart, which accounts for 94% of its business. SoftBank and Symbiotic's recent GreenBox Systems venture aims to diversify and expand their warehouse automation clientele. By acquiring Kroger-Albertsons, they're essentially 'buying the customer,' thus creating a built-in demand for their robotic solutions and accelerating ROI.
A Counterweight to Amazon
As SoftBank, Symbiotic, and their partners broaden their automation capabilities, they are effectively emulating Amazon but specializing in grocery automation. They offer warehousing, distribution, and fulfillment as a service, allowing grocery stores to focus on customer engagement. In doing so, these companies provide a compelling alternative to Amazon's grocery experience, leveraging technology to revolutionize retail.
https://www.bloomberg.com/news/articles/2022-08-23/softbank-s-23-billion-loss-looks-like-more-wework-fun
https://www.thetwentyminutevc.com/brad-gerstner/
https://www.bloomberg.com/news/articles/2023-09-05/kroger-albertsons-in-talks-to-sell-stores-to-c-s-softbank
https://www.ocadogroup.com/about-us/osp-partners/kroger/
https://www.softbankrobotics.com/news/20221018/