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Webvan Founder Plots an Amazon Prime Competitor Powered by Robots

A robotic warehousing system "takes out almost all of the human labor."

Shutterstock/Robert Kneschke
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Fourteen years after his first same-day delivery service went belly up, Webvan founder Louis Borders is working on a redo. The serial entrepreneur, who also co-founded the Borders bookstore chain, is developing a $99-a-year shopping club that aims to deliver groceries and other merchandise from partnering retailers on the same day they are ordered, he told Re/code in an interview last week.

If that sounds familiar, it should. Webvan rose to prominence during the first dot-com bubble on the promise of same-day delivery, but flamed out after expanding too much before figuring out how to conduct its business profitably. This time, though, Borders thinks he has a secret weapon to make the economics work: A robotic warehousing system where people are an afterthought.

“It takes out almost all of the human labor,” he said.

In Borders’s vision, less than 10 percent of orders will be touched by a human; the rest will be picked and packed exclusively by a robot army. The model has the potential to drastically reduce operating costs by 50 percent while improving delivery times, Borders said.

Borders said the system will help the company provide same-day delivery for no extra charge over the annual fee and one-hour delivery for a small fee. The startup, which is going by the straight-as-an-arrow working name of Home Delivery Service, would sell fresh and packaged groceries alongside other general merchandise to try to replicate the combination that Walmart has followed in the brick-and-mortar world.

The idea would pit the startup against companies like Amazon, which offers same-day and two-hour delivery on certain goods for no extra charge for Prime members in some cities. Amazon also acquired a robotics company called Kiva that is slowly being rolled out to help automate Amazon facilities. HDS would also compete with grocery delivery businesses such as Instacart, which delivers items from brick-and-mortar grocers to customers’ doors.

There are still several big open questions about Borders’s company, though. For one, the startup is still only in the prototype phase of building one of these robotics systems, even though it has been working on the idea since at least last year. So it’s no sure thing.

The company also hasn’t yet signed up any retail brands — vertically integrated ones like Lululemon or Starbucks — to sell general merchandise in the online mall. Borders essentially believes that if he builds it they will come. But who knows.

Lastly, HDS plans to use its own fleet of vehicles and delivery people to deliver orders, an expensive operation by any measure.

All of these what-ifs mean that, even in a best-case scenario, HDS won’t be launching until next year, first in San Francisco, and then in other markets if the first one finds success. It’s also far from clear what its selection will look like when it does launch.

In the meantime, HDS has been pitching preorders of its robotics system to other businesses. The first to sign on is Toyota’s manufacturing arm, which has paid HDS $2 million as a down payments of sorts to procure its own automated order fulfillment system from HDS. Borders hopes to sell five of these deals in total and insists they won’t be a distraction.

“It’s validation, it’s cheap funds and it’s expertise,” he said.

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