CSCMP's Supply Chain Quarterly
Strategy
October 16, 2019
Forward Thinking

Logistics tech firm builds underground, automated warehouse

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Site in parking garage will support one-hour grocery delivery in Tel Aviv, CommonSense Robotics says.

Logistics technology startup CommonSense Robotics said today it has begun construction of what it calls the "world's first underground automated warehouse," and will use the space in a parking garage in downtown Tel Aviv, Israel, to provide profitable, one-hour delivery services for local grocery retailers.

In order to meet the growing consumer appetite for same-day and one-hour deliveries, e-commerce fulfillment must move from centralized warehouses in rural areas to smaller sites inside cities, said Tel Aviv-based CommonSense, which is backed by venture capital funding from firms including Google Inc.

Performing e-commerce fulfillment in city centers presents a problem, since traditional urban spaces can be cost-prohibitive for retailers, but CommonSense says it can leverage underutilized urban real estate such as vacant parking lots and abandoned storefronts as a solution.

The "micro-fulfillment center" will be CommonSense's second robotic fulfillment center, following its first facility, known as MFC ONE. That site has been servicing retail partner Super-Pharm since October 2018 and is currently serving over 400 orders a day from a 6,000-square foot location.

The new MFC fits the company's robotic fulfillment center design into an 18,000-square foot triangular space with an average clearance height of just 11 feet. Located beneath Tel Aviv's oldest skyscraper, Shalom Meir Tower, the grocery site will include three temperature zones, supporting on-demand fulfillment of fresh, ambient, chilled, and frozen items.

"In order to be on-demand, you need to be close to your customers. In order to be profitable and scalable, you need automation," Steve Hornyak, CommonSense's chief commercial officer (CCO), said in an email. "That combination is really hard because typical e-commerce automation solutions require airport sized real estate—not something easy to find in urban areas!"

The new MFC will handle last-mile delivery however its retailer clients wish, whether that means hiring third-party delivery services, integrating with the retailer's own delivery operation, or hosting click-and-collect operations, he said.

"In terms of logistics, our new site is located in prime location, but from an operational standpoint, by going underground we're paying a fraction of the cost compared to a retail store right above us," he said. "It's the flexibility of our automated solution to fit into any type of urban space that's going to be critical to solving the challenges of on-demand e-commerce."

According to the company, its approach marks the first of an entirely new retail infrastructure that brings a "location-first" approach to automated fulfillment. By optimizing on the last mile rather than existing store real estate or traditional warehouse space, the strategy makes on-demand e-commerce possible, profitable, and sustainable for retailers, CommonSense said.

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

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