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Starship COO: Robots will boost on-demand sector profits

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Starship COO: Robots will boost on-demand sector profits

In a crowded market of well-funded on-demand startups, robots and drones are increasingly emerging as a game changer. To make sense of some recent developments, S&P Global Market Intelligence spoke to Allan Martinson, COO at Starship Technologies, a delivery robot startup launched by two former co-founders of Skype Technologies SA.

?With human labor and delivery costs rising, the profitability of on-demand businesses hinges on automation

?Robotics in the delivery market will be a huge net creator of jobs

?Deliveries in an automated era will be practically free

S&P Global Market Intelligence: In light of Starship's recent $17.2 million seed round, why are your investors betting on robotics?

SNL ImageAllan Martinson, COO of Starship Technologies
Source: Starship Technologies

Allan Martinson: The delivery market is one of the remaining few industries of scale relatively untouched by new technology. The sector's two main costs are human labor and the delivery device or vehicle. Unfortunately, both of these costs are only going up which creates a fundamental problem for local delivery services and the e-commerce establishments- both local and global- that rely on them. Robots and automation are the obvious solution to this cost problem.

What impact will robots have on on-demand services like Uber Technologies Inc. or Deliveroo?

The profitability of on-demand businesses absolutely hinges on automation. For example, if you take venture capital investments alone in the last seven or eight years, billions have gone toward all kinds of delivery companies which are still losing money each year and struggling to break even. The same amount of funding would have gone further had it been invested in automation.

Are we also looking at mass unemployment here?

The total opposite. Rather than destroying jobs, we believe that automating local delivery will create a lot of jobs. Firstly, local delivery businesses already have a difficult time hiring and retaining drivers. But if we can make local deliveries easier and more cost-efficient, this will be a big boost for local businesses and an even bigger boost in the number of delivery vans required to transport goods from warehouses to local areas. In this regard, robotics in the delivery market will be a huge net creator of jobs.

Aside from food delivery, what are your other core markets?

Food delivery is one of our three main markets. We also work in the packaged goods and groceries delivery markets. If you look at the total number of items delivered at people's homes, you'll find that approximately 93% are covered by these three categories.

Tell us a bit about the robots.

Our robots are designed to operate on sidewalks alongside pedestrians rather than cars on the road. We limit them to slower speeds of around 4 miles per hour or 6 kilometers per hour at a radius of three kilometers. They operate autonomously for the most part but also include the option for a human to guide its path through more complex routes and navigate human interactions. Installed with cameras and audio capability, our robots can carry packaged goods or food weighing up to 20 pounds or 10 kilos. Our announced partnerships include online takeaway company Just Eat Holding Ltd, parcel delivery firm Hermes, retail business Metro Group, Swiss Post, and Scandinavian online takeaway business Wolt among others. U.S.-based on-demand restaurant delivery service DoorDash and courier marketplace Postmates have also begun to pilot test in the U.S. market.

How do robots actually work from dispatch to point-of-delivery?

It is pretty simple. They work like any other courier. For instance, a restaurant wanting to deliver an order can dispatch a robot either by using a mobile application or via text message. Customers are able to track the robot's route and receive notifications throughout the process.

Is this more cost-effective?

Ultimately, we are moving towards an era of automated delivery which will, in future, be practically free. At the moment we are targeting a few dollars or euros per delivery. This lower price point will ultimately appeal to delivery companies, who are limited by the cost of operations.

Why is now a good time to raise funding?

We are at a point in our development where we have gone beyond the prototype stage and have a product that has been through pilots and is already on the market. As a result, we had a good amount of interest from the venture capital and industrial investor communities.