Shopify suffers huge loss on 6 River Systems sale

6 River Systems’ Chuch autonomous mobile robots. | Source: 6 River Systems

When Shopify sold 6 River Systems, many assumed Ocado paid pennies on the dollar to acquire the autonomous mobile robot (AMR) maker. Now we know exactly how good of a deal Ocado got.

In its 2023 mid-year financial report, Ocado said it paid just $12.7 million to acquire 6 River Systems. For comparison, Shopify paid $450 million to acquire 6 River Systems in September 2019. Ocado paid roughly 2.8% of what Shopify paid for 6 River.

Ocado said the 6 River business “has a good client list, is debt-free, cash flow positive, and generates positive EBITDA.” I’m no mathematician, but taking a $437.3 million loss can’t be good, even if you’re trying to offload a business that’s no longer part of future plans to cut costs.

Founded in 2015, 6 River Systems builds AMRs for the logistics and non-grocery retail sectors. The AMRs provide automated assistance to human pickers in a warehouse, working collaboratively with them. According to Ocado’s financial report, at press time, 6 Rivers’ Chuck AMRs were deployed in more than 100 warehouses worldwide,
with more than 70 customers.

Based in Massachusetts, 6 River Systems was founded by Rylan Hamilton, Jerome Dubois and Chris Cacioppo, who have deep knowledge of robotics, software and fulfillment operations. Dubois and Hamilton are former employees of Kiva Systems, the well-known AGV maker acquired by Amazon in 2012 for $775 million.

Growing robotics portfolio

6 River will become part of Ocado’s Intelligent Automation (OIA) division. Ocado said OIA was established to bring Ocado’s automation technologies to clients outside grocery. OIA will operate a capital-light material handling equipment sales model designed so that upfront fees better match Ocado’s cash outflows and will largely leverage existing OSP technology. Ocado said discussions have progressed with several potential clients across a range of industries.

The 6 River acquisition also adds a new type of robot – AMRs – to Ocado’s portfolio. The company has developed its own automated storage and retrieval system (ASRS) for years for its online grocery business. Ocado recently won a lawsuit against fellow ASRS developer AutoStore, in which AutoStore must pay Ocado a $256 million settlement over the next two years.

In 2020, Ocado acquired two U.S.-based robotics companies for $287 million. It purchased San Francisco-based Kindred Systems, which specializes in robotic piece-picking, for about $262 million and Las Vegas-based Haddington Dynamics, a developer of low-cost robotic arms, for about $25 million. Ocado said the acquisitions will enable it to enter new robotics markets outside of grocery.

Pulling it all together

I recently spoke to an investor who was involved in selling a robotics company to Ocado. This investor, who wished to remain anonymous, said the 6 River acquisition makes strategic sense for Ocado, but that it will take time for the plan to come together.

“Ocado doesn’t care about the $40-50 million in yearly revenue that 6 River’s AMRs produce,” the investor said. “Ocado wants to be able to offer Kroger’s and others a soup-to-nuts solution. But each of those systems – 6 River’s AMRs, Kindred’s piece-picking robots and Ocado’s ASRS – were originally designed for different end markets.”

One source told The Robot Report “the whole 6 River Systems robotics team was axed” before the acquisition by Ocado. Surely Ocado has engineers who can look under the hood of 6 River’s AMRs and make sense of it all. But it will likely be a long time before Ocado’s robotics platforms will all work seamlessly together.

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