A Prosaic Industry on the Cusp of Epic Disruption

It's 2021 and in the eyes of some futurists, it's a failure that the world doesn't yet have movie-style flying automobiles.

Investors, take heart because before our very eyes, myriad essential, prosaic industries are being disrupted and those disruptions bring an array of investment implications.

Think about the everyday activities that are being disrupted by technological advances. Sure, autonomous vehicles have some bumps to be worked out, but self-driving technology is improving and it's not unreasonable to expect that sometime in most readers' lifetimes their Lyft or Uber rides will take place without a human driver.

Then there's the very basic yet highly popular food and package delivery realms. Everyone loves getting a package from Amazon or their favorite dish from DoorDash and these are industries are endeavors ripe for disruption via automation and robotics. In the U.S., companies such as Dominos, FedEx, Kroger and Walmart are, in some areas, deploying for robots for some deliveries.

Robots and Groceries

The reason this is happening and why it's notable for investors is easy to understand: Costs. As in robot delivery systems can drive costs down for companies while potentially boosting efficiencies for consumers.

“Previously, ARK estimated that a sidewalk robots could deliver food orders for as little as 6 cents per mile, 20 times less than the cost of human delivery,” writes ARK analyst Tasha Keeney. “Although local regulations may slow down the rollout of sidewalk robot systems, slightly larger robots that can integrate with traffic could pick up the slack.”

Think it's out-of-this world that you'll one day see robots on sidewalks delivering groceries? Think again. It's already happening or, at the very least, it's being tested. Speaking strictly on a personal, anecdotal level, I live in a heavily populated area of Southern California and I recently saw one of these robots on the sidewalk.

Nuro, the company behind these products, makes a variety of models. Some are capable of street use (think Domino's delivering a pizza). Others are smaller and look like expensive remote control cars. Those are the models used on side walks and that can deliver groceries. And yes, there are benefits to consumers in this equation.

“Acording to ARK’s latest research, integrated traffic robots similar to those from Nuro could deliver food for less than 40 cents per trip, six times less than the cost of a personal trip to the grocery store, as shown below,” adds Keeney.

As the ARK analyst notes, the average American household makes 1.6 grocery runs per week, indicating a $4 billion market opportunity could be afoot. It could be larger.

“ARK estimates the robot grocery delivery market could expand to $12 billion a year, paling in comparison to the roughly $70 billion cost of all household grocery deliveries in the US, accounting for personal car transportation costs,” she notes.

More Benefits

To many of us, Amazon prime and related services are a great deal because even though there's a delivery fee involved, it saves us the time and gas money of a grocery store trip or a Target run. However, the benefits don't end there. Broader adoption of robotics delivery carries with it potentially massive (and positive) economic implications.

“ARK estimates the robot grocery delivery market could expand to $12 billion a year, paling in comparison to the roughly $70 billion cost of all household grocery deliveries in the US, accounting for personal car transportation costs,” according to Keeney.

That's sure to warm the hearts of clients that are focusing on sustainable investment and worried about robotics displacing workers. Adding to the sustainability case, delivery robots are essentially electric vehicles and not powered by gas, meaning there's an obvious element of environmental advantage here.

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