Online British grocer Ocado (OCDO.L) has invested £10m ($13,8m) in autonomous vehicles firm Oxbotica to drive its ambition to make self-driving grocery delivery vehicles.
The investment, announced on Friday, will see the companies develop “kerb-to-kitchen robots” to drop off shopping at homes. Ocado said the deal was part of a "broader relationship that includes both Ocado's financial investment and a commercial collaboration agreement."
Oxbotica's technology could be used to power vehicles that operate inside the retailer's warehouses, the yard areas that surround them, and last-mile deliveries.
FTSE 100 (^FTSE) Ocado, which will take a seat on Oxbotica’s board, said introducing the autonomous tech could potentially save money.
Moving orders within its fulfilment centres costs 1.5% of Ocado's UK sales and the cost of “final-mile delivery” is about 10% of sales. Labour represents about half of these costs.
WATCH: Ocado eyes tech growth as online grocery sales boom during pandemic
"The ultimate ambition is to enable Ocado's partners that use the Ocado Smart Platform to reduce the costs of last-mile delivery and other logistics operations," Ocado's chief executive Tim Steiner said.
Clive Black, head of research at stockbroker Shore Capital, said: "There is not indication as to whether this investment will make a positive return for Ocado’s shareholders, albeit that is not wholly unusual when it comes to investments by this group."
Black noted that the announcement contained "wonderful technobabble" and "had a marvellous chuckle factor".
"Some lovely jargon – don’t we all need a kerb to kitchen robot," he wrote in a note.
Shares in the company rallied 1.8% on the announcement.
Ocado first worked with Oxbotica in 2017 when it conducted a two-week trial using an early prototype developed by Oxbotica. The vehicle carried out autonomous deliveries in Greenwich.
"Since that initial trial, Oxbotica has made significant progress in developing its platform," Ocado said.
As part of the deal, Ocado will outfit some of its delivery vans and warehouse vehicles with data capture capabilities — like video cameras and radar — to train and test Oxbotica’s technology.
Oxbotica was founded in 2014 by two professors at Oxford University. Paul Newman, co-founder of Oxbotica, said that the partnership was an “excellent opportunity” for the two firms to act on its vision of an autonomous future.
“By combining both companies’ cutting-edge knowledge and resources, we hope to bring our Universal Autonomy vision to life and continue to solve some of the world’s most complex autonomy challenges,” he said.
Alex Harvey, chief of advanced technology at Ocado, added: "We are excited about the opportunity to work with Oxbotica to develop a wide range of autonomous solutions that truly have the potential to transform both our and our partners’ CFC and service delivery operations, while also giving all end customers the widest range of options and flexibility."
Sales at Ocado passed the £2bn mark in 2020 as the COVID-19 crisis drove a global boom in online shopping.
According to official figures by the Office for National Statistics (ONS) online shopping jumped from a fifth to a third of all purchases made in the UK last year due to COVID crisis. The sector grew by by 46.1% in 2020 — the fastest annual growth since 2008.
WATCH: What UK government COVID-19 support is available?