An online logistics company backed by AFR Rich Lister Ruslan Kogan is considering raising external capital or an initial public offering after investing $40 million into robotic fulfilment centres.
eStore Logistics, which delivers more than 20 million online orders a year for pure-play and omni-channel retailers including Kogan.com, Temple & Webster, Myer and David Jones, is opening two state-of-the-art fulfilment centres in Melbourne which use AI-enabled robots to help speed up deliveries.
The two-year, $40 million investment will double eStore’s capacity, from about 35,000 square metres to 70,000 square metres and from about 105,000 orders a day to 200,000 a day.
It will enable more of eStore’s customers to offer affordable same-day delivery, even for orders received as late as 4pm, keeping up with rapidly evolving customer expectations.
The robots look like robotic vacuum cleaners, but each weighs more than 100 kilograms and can lift mobile storage units that are three metres high.
It’s one of the biggest investments in robotic automated fulfilment in Australia and comes after a surge in online spending during the coronavirus pandemic.
E-commerce sales almost doubled during lockdown, lifting online penetration from 5.7 per cent of total retail sales a year ago to 10 per cent in April, according to Deloitte.
eStore chief executive Leigh Williams said online growth had eased since stores started to reopen, but the online habits formed during the pandemic would prevail and e-commerce would take a larger share of retail spending.
“Through the pandemic we saw e-commerce advance for a year for every week of the lockdown,” said Mr Williams, who founded the company 12 years ago.
“As the lockdown has lifted we can see from our client base sales have remained very strong, but we haven’t seen the astronomical growth continue.
“But I don’t think we are going to go back to pre-COVID volumes and e-commerce penetration. I think we’ll see sales [growth] continue, especially through to Christmas.”
Jen Geale, co-founder of Mountain Bikes Direct, one of eStore’s customers, said the company’s online sales surged during the pandemic and had remained strong, even as stores reopened.
“We’re doing as much or more as we did during Black Friday, it’s steadily busy and it just keeps going,” she said.
“We can get orders mid-afternoon and get those out the same day, which is something we haven’t been able to do previously.”
The first of eStore’s robotic fulfilment centres opened earlier this year and the second, which at 26,600 square metres is larger than the Melbourne Cricket Ground, will open in August.
More than 200 autonomous robots will be in operation within a year or two. The robots look like robotic vacuum cleaners, but each weighs more than 100 kilograms and can lift mobile storage units that are three metres high.
The AI-enabled robots whiz around the warehouse at two metres a second and use historical data matching to work out the best way to locate and move the mobile storage units to optimise space and make the stock-picking process (which is done by people) up to four times faster than a traditional fulfilment centre.
eStore, which is 76 per cent-owned by Mr Williams and 19 per cent-owned by Kogan.com co-founder and CEO Ruslan Kogan, has bootstrapped its expansion to date but is considering options to raise external capital.
“All options are on the table right now,” Mr Williams said. “We’ve been successful to date doing what we’re doing being bootstrapped and with bank lending.
“When it comes to the right time we may look seriously at taking on the right investors … an IPO is definitely one of [the options].”
eStore plans to secure more distribution centre sites to form a network of robotics-enabled warehouses across Australia.
“This rollout has about a two-year horizon for us to reach capacity,” said Mr Williams. “Once it comes online we’ll go into the next phase of expansion.”
Article credit – www.afr.com.au