Taking on Big Grocery, one head of lettuce at a time
As a first order of business, the new Amazon-owned Whole Foods late last month slashed the prices of a few items, mainly avocados, apples and other fresh produce. That led to a lot of relief in the grocery industry: unlike its scorched-earth decimation of book-selling, electronics and apparel, Amazon did not seem, at least for now, to be seeking conquest of groceries.
But Brandon Alexander, a robotics specialist formerly of Google X, wasn't among those sighing. As he saw it, Amazon was declaring war on the grocery industry's underbelly: consumers would willingly shop on-line for almost every other product sold by Safeway and Kroger's, but not their head of lettuce, their ear of corn, their peaches or tomatoes.
Why it matters: Competing grocery companies and farmers are in trouble, says Alexander, co-founder of a robotics farming startup called Iron Ox. By cutting produce prices by 43% in at least one case, Amazon is actually taking the fight to these grocers. "It was considered a safe activity," he tells Axios, "but now the battle has been brought to them."
Enter the automated farm: According to Alexander, Amazon will keep the pressure on fresh produce, and by extension competing grocers and farmers, who simply won't be able to earn a profit at such prices. But robotics combined with hydroponics are a way for farmers to grow the equivalent of 30 acres of vegetables on a one-acre plot, and sell them at the same cut-rate prices at which Whole Foods is currently marketing some of its produce. "This is a perfect space for robotics," he said. "Here we can compete on quality and price."
Thus far, robots haven't really infiltrated farming because consumers demand fruit and vegetables that look good — robots bruise them up. In addition, as John Deere has discovered, automated farming is extremely hard because of obstacles in fields that often only a farmer with a trained eye can discern.
That's why Iron Ox, which Alexander and his co-founder Jon Binney started in 2015, doesn't work on outdoor plots, but out of a 5,000-square-foot warehouse in San Carlos, CA., in Silicon Valley. It is outfitted with a hydroponic system, using no soil, and a set of robots, producing Boston and Red Oakleaf lettuce, in addition to Genovese basil and kale, in six-week cycles. When one lettuce head is ready for picking, the robot puts the seedling of another in the same spot. His goal is fully automated crop production.
Such warehouses can be built on the outskirts of any city, and thus provide year-round, same-day produce, he said. By the end of the year, Alexander aims to be selling his produce commercially.
But if his idea works at scale, won't Amazon — or Walmart, or Costco — simply seek to buy him out? Alexander laughed. That is something to contemplate later.