Rami Levy Launches Robotic Supply Center, Two-hour Grocery Delivery

Supermarket mogul Rami Levy promised his supermarket customers on Wednesday much-improved delivery times, with groceries arriving within two hours of placing an order, and with minimum errors. This will be made possible by its new robotic logistics center, a facility in Tel Aviv’s Shalom Tower that Levy unveiled yesterday.

The logistics center will be run by the startup Fabric, formerly known as Common Sense Robotics. Levy signed an exclusivity agreement in Israel with Fabric for the next five years.

Levy’s eponymous supermarket chain will start filling deliveries from its new logistics center as of January. Initially the 1,800-square-meter facility will cover deliveries only in the Tel Aviv area. As of the end of 2012, the company intends to have another 11 robotic logistics centers around Israel.

Levy said he anticipated the logistics center would be saving the grocery chain money. Currently deliveries for online orders are not profitable for Israel’s supermarket chains. Each delivery costs the companies an estimated 37 shekels in costs including manpower putting the delivery together and bringing it to the customer, gas and refrigeration. Customers generally pay 30 shekels per delivery, meaning the chains are subsidizing another 7 shekels.

Levy said the robotics technology will enable the company to save about 50% of processing costs. Currently the grocery chain employs 350 people to pull together deliveries, with each employee processing eight to 14 orders per day. It takes an employee about an hour to pull together a delivery.

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Robots, on the other hand, will be able to pull together a delivery in about 10 minutes, saving some 90% of manpower.

Small logistics centers will be able to handle about 400 deliveries a day, and large ones will be able to handle about 1,000.

Food delivery is a growing sector in Israel, and the grocery chains’ futures are largely dependent on it. Currently, Israel’s market leader is the Shufersal grocery chain. Some 15% of Shufersal’s sales are online.

Rami Levy’s online sales currently account for 7.2% of its turnover.