The next time you’re shopping for groceries, there’s a good chance the person standing next to you is fulfilling an order for Instacart or the grocery store’s online ordering system on behalf of another customer. Since the pandemic, the rise of grocery e-commerce has skyrocketed. In the U.S. alone, online grocery sales have grown from $30B pre-Covid to >$100B in sales per year. Unlike many pandemic trends, the rise in grocery e-commerce hasn’t declined in the wake of Covid — it’s here to stay and rapidly growing. In fact, estimates project that online grocery is likely to be a >$200B market in five years, which is the equivalent of 20% of the total U.S. grocery market. 

Although grocery e-commerce has surged and continues to grow in popularity, it poses several problems for grocers — like Kroger, Safeway, Albertsons, Amazon, Walmart, and more — and consumers. Prior to online ordering, consumers were “free labor,” picking and packing items at no cost, in store. When we order our groceries digitally, someone else must pick those items and it comes at a cost to grocers — typically ~9% of the total value of your order. At first glance, ~9% additional costs may not seem like a huge uptick, but for grocers who operate at a <5% store level operating margin, a 4% shift to online sales equates to a ~50bp headwind. In layman’s terms, online grocery is a business “risk” to traditional grocers. This is especially the case since as I mentioned, online grocery is expected to grow to 20% of the total grocery market in five years — going from a “risk” to an “existential threat” very quickly. 

Legacy automation and new entrants have attempted to use AS/RS (Automated Storage / Retrieval Systems) to automate grocery, but those systems fail for multiple reasons. Incumbent automation has a large footprint and large capex (Ocado Sheds are >$50M). As a result, they cannot be located near the customer, and instead, must serve a full region. Their automation is also highly dependent, resulting in downtime. This is in part because AS/RS systems are not designed for grocery’s multi-climate (ambient, chilled, and frozen) environments. Consumers pay the price in the form of high costs, inconvenient pickup, and frequent product substitutions. Plus, inefficient inventory management in grocery stores is one of the key reasons 40% of food is wasted before it’s consumed.

The short version? Online grocery is ruining the traditional grocery business model and there is no technology solution available that works — until now. 

Introducing Fulfil

Today, four years after our first investment, the Eclipse team is thrilled to announce our partnership with Fulfil to help accelerate its mission to revolutionize online grocery via robotic automation. 

Leveraging advanced AI, machine learning, and optical and sensor technologies, Fulfil has invented a completely unique, fully automated fulfillment system to enable customer-centric, sustainable, and profitable online grocery at scale. Unlike other automation solutions being tested in the grocery industry, Fulfil’s robots do all the picking and packing across all product categories and temperature states. 

When we first met Fulfil in 2019, Early-Stage Partner, Greg Reichow, saw a highly differentiated technology solution solving a massive problem. The platform was engineered with limited dependencies and each Vertical Lift System (VLS) was independent, as was each “bot.” Further, Fulfil’s world-class engineering team had designed a system that had the ability to produce >99% uptime and could automate both the “pick” and the “pack” of the customer’s order, removing the need for manual labor. And, this system was built for ~$4-5M, with a 10,000 sqft. footprint, while delivering >$20M sales annually — essentially replicating an average grocery store with one fourth the footprint and zero cost of labor. The Eclipse team had not seen anyone take the system design approach Fulfil had and led the company’s $16M Series A in 2019. In 2020, Eclipse also participated in the company’s $40M Series A-2.

Since Eclipse’s original investments, Fulfil made tremendous progress and demonstrated ultra-high uptime, perfect order accuracy, and high throughput. This led to added conviction for the Eclipse team that Fulfil’s technology would be the solution for automating fulfillment — the $1T grocery industry’s biggest challenge — so we doubled down and Eclipse Early Growth led Fulfil’s $60M Series B in 2022. Since then, Fulfil has opened its first automated dark store, or micro-fulfillment warehouse, in partnership with The Save Mart Companies, to power a same-day grocery delivery and pick-up service, Lucky Now. Within minutes of receiving an order, Fulfil’s robots accurately pick all categories of groceries — including refrigerated and frozen goods— and bring packed grocery bags to a waiting area where drivers collect them. This means that any customer can receive their groceries, packaged automatically, in <15 minutes, all without incurring any additional costs due to automation. 

Today’s online grocery business is built on manual, wasteful, and expensive processes. FulFil’s technology is proven and differentiated, the market is massive, and the unit economics are highly attractive. In ten years, the way we shop for groceries will be radically different and Eclipse is thrilled to continue supporting Fulfil as they unlock value for businesses and end customers, while advancing sustainability goals.

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