According to a Deloitte Talent Report, labour costs in China have risen fivefold over the past decade, along with an ageing population and a disappearing demographic dividend, making it increasingly urgent for logistics companies themselves to reduce costs and increase efficiency. At the same time, the younger generation is becoming reluctant to take on repetitive and heavy work in warehouses, making it increasingly difficult to recruit workers. In addition, with more and more personalised demands, shorter and shorter product life cycles, and the massive popularity of e-commerce promotions such as the Double 11, companies are being forced to be smarter and more flexible in their logistics and supply chains to cope with the rapid changes in market demand as well as peak and trough movements. Finally, in a world where cyclical macroeconomic risks are inevitable and black swan events can hit economies and businesses hard and unexpectedly, EqualOcean believes that warehouse robotic systems that ensure sustainable supply chain operations in extreme situations, allow businesses to operate without disruption and respond quickly to market demand, are poised to have a broader future and market potential.
EqualOcean consulted the ABI Research database and found that global warehouse robotics will grow by no less than 1,200% between 2018 and 2025, with more than 50,000 warehouses worldwide completing robotics deployments, a figure that is 12 times higher than in 2018. Meanwhile, according to Interact Analysis, warehouse logistics robot deployments are expected to account for 73% of all total mobile robot deployments by 2027, indicating that the market for this type of robot has strong market demand and growth momentum, with promising prospects for future development.
A Globalisation and sustainable business model
EqualOcean has learned that since its inception, Geek+ has set its sights on the global market and has been the number one AMR robot in the world for four consecutive years, with over 10,000 AMR robots deployed worldwide and sales, operations and service capabilities in over 30 countries, Geek+ have sales and service capabilities in over 30 countries around the world.
Based on superior product quality, solutions that match niche scenarios, and high quality and professional global services, Geek+ has created real and visible returns and value for its customers, gaining high recognition and good reputation from them, and achieving continuous repeat business. With the market horse-trading effect, Geek+ brand and technology leadership continues to grow, building an increasingly competitive business, and the company has maintained high business growth in recent years, starting to move towards a successful stage of profitable business sustainability. At the same time, from industry rule-making to the bargaining power of upstream suppliers and downstream buyers, Geek+ does not have much say at the moment and is not yet in the best of business, and still has a lot of room to grow.
"ALL-in-One" , Creating differentiated products
To meet the differentiated demands of different industries, Geek+ is launching the All-in-One goods-to-man solution in 2021, gathering the whole product line including shelf-to-man, box-to-man, intelligent sorting, four-way vehicle, order-to-man, goods-to-man picking solution PopPick, top-store-bottom-picking innovative solution SkyPick, etc. According to the characteristics of different types of robots, Geek+ focuses on the layout of retail, footwear It focuses on the research of different industry scenarios and pain points, and creates a series of intelligent logistics solutions with deep industry integration to help customers make more professional choices and meet different customers' differentiated demands.
AI technology to save costs, Geek+ has developed a more intelligent AI algorithm, combining AI technology with the enterprise's warehouse management system. The robot can store and position goods according to the frequency of purchase, storing fast-selling goods in the easiest place for the robot to pick and storing less ordered goods in the back row, thus further optimising the already efficient automated warehouse operation, responding to demand with agility and saving costs. However, the lack of hardware upgrades and the company's own focus in recent years may make it difficult to meet the needs of customers in more scenarios in the future.
With a flexible product portfolio, in 2018, Geek+ introduced "Robot as a Service (RaaS)" for the first time in the industry, allowing companies to not only purchase, but also choose short-term leasing, system operation or one-stop smart warehousing services. The partnership model reduces the financial and capacity thresholds for enterprise customers to use advanced technology, while empowering them to quickly upgrade their supply chains with robot-based operational capabilities, helping them to respond more quickly and flexibly to market demand and seize business opportunities. However, it is important to note that the RaaS model will test the depth of Geek+'s knowledge of its overseas customers and their businesses, and will also place greater demands on its ability to continue to provide local operations consulting, on-site support and after-sales training.
First to go abroad and build a moat
As the first Chinese logistics robot company to successfully go overseas, with the first-mover advantage, Geek+ has established a first-mover advantage in the industry and a moat for international business development in terms of patents, product certification, safety requirements, data privacy requirements, professional local teams, and after-sales service systems in overseas markets. At the same time, domestic logistics robot manufacturers also have obvious advantages in terms of product prices. The domestic engineer's bonus overlaid with the price war caused by homogeneous competition in the market, the lowering of the threshold for core components of logistics robots and the obvious trend of localization make Geek+ outstanding in the overseas market in terms of cost performance.
Continuing to strengthen its localization service capability, Geek+ now has regional headquarters in the US, Europe, Japan, Singapore, Korea and Hong Kong, China, and has set up a complete local team with mature sales, delivery and service capabilities and rich experience. In Japan, for example, in 2017, Geek+ officially entered the Japanese market, and based on its localization strategy, it has established a Japanese branch and localized service team to carry out its business. 2022, Geek+ will set up its own intelligent warehouse in Kanagawa Prefecture, Japan, and launch robot rental services to continue to increase its investment in the Japanese market. According to the Japan Fuji Economy report, Geek+ has a market share of over 70% in Japan and is the market leader in logistics robots in Japan.
The hardware supply chain is gradually maturing, and software and algorithm updates are crucial. Logistics robots need more accurate end-goods identification algorithm solutions when facing scenarios such as massive SKUs, complex stacking scenarios, irregular item packaging, and broken identification codes. In terms of hardware parameters and performance indicators, the leading domestic manufacturers such as Geek+, Haikang and Quick Warehouse are basically comparable to overseas heads. In terms of hardware parameters, the maximum operating speed of China's leading logistics robots is comparable to that of the leading international enterprises represented by MiR and Fetch robotics, and they have a greater advantage in terms of battery life, with a maximum of 24 hours of operation. The core of the product's soft power is to further widen the moat by optimising identification and picking, navigation technology, path planning and scheduling systems.
In terms of patent technology reserves to avoid potential risks, Geek+ has submitted more than 950 patent applications worldwide and has been granted more than 400 patents, which is not a large number. For logistics robot companies, overseas market expansion must pay attention to avoiding patent risks. At present, domestic logistics robot manufacturers have not yet seen any obvious overseas patent disputes, but most domestic logistics robot products are a group of KIVA-type storage robots that began to emerge in 2014, so it is necessary to be more cautious when going abroad to avoid patent risks, and can identify patent infringement in advance for the patent regulations of different markets In addition, it is important to identify the risk of patent infringement, design patent avoidance schemes and make targeted international patent applications.
Can team capabilities lead to smart technology
With a background in technology and investment, a professional technical team and a determination to be number one, Geek+ has quickly taken over the logistics robot market. To become a great global robotics company is the company vision mentioned by Zheng Yong, the founder and CEO of Geek+, in many previous interviews, but unlike most companies, there is almost no description of the company's mission vision, values and so on on the official website of Geek+.
From the perspective of the company's core management team, the four founder-level executives all come from a technical background, and Zheng Yong also revealed in an interview last year that the company had started to move towards a profitable and commercially sustainable stage after previous growth. This shows that technology and R&D investment are the key to innovativeness and sustainable expansion.
From the founding of the company to the management of 200, 500 and 1000 people teams, Geek+ has also experienced continuous iterations in organizational management, from the agile first in the startup stage, 200 people scale to build organizational values to 500 people scale to top talent pool, thousand people scale end-to-end organization and organization to guarantee technical competitiveness. EqualOcean also further noted that in Geek+'s latest job openings, late operations and maintenance-related positions account for about 43.8%. For Geek+ at this stage, after-sales service is still a major competitive advantage, and how to quickly occupy more markets, the business team may be a more suitable key winner at this stage.
In addition to the explosion of the intelligent logistics market and Geek+'s global business strategy, Zheng Yong's background in investment institutions may be the key to Geek+'s understanding of how to leverage the power of capital. From the development history of Geek+, since its establishment in 2015 and layout of overseas business in 2017, it has been at the top of the list of AGV industry financing amounts, and in May 2021, after signing a listing counseling agreement with "CICC", it has pushed Geek+ to a new phase, but last year's new round (E1 round) of $100 million financing However, last year's new round (E1 round) of US$100 million financing also confirmed the postponement of the IPO plan.
In terms of shareholding, the company's shareholding structure has good checks and balances (Z index 2.5), with Marcasite Gem Holdings Limited, the largest shareholder holding 20.70% of the shares, not having absolute control (CR1 index 20.7002), and the overall shareholding is relatively fragmented (H index 594), which on the one hand has contributed to the rapid development of Geek+, but is also a potential challenge for the future.
During the period of rapid development of the industry, who is the real competitive advantage, price or service?
In recent years, Geek+ has undeniably achieved impressive growth in the industry. Whether it is a company valuation of over $2 billion, or the previously announced growth figures of "over RMB 2 billion in sales orders and over RMB 1 billion in revenue in 2021, with an expected annual growth rate of 100% for the full year of 2022", it shows that the high level of market demand and recognition provides Geek+ with room for a more competitive pricing strategy. Nevertheless, even in the e-commerce industry, which has the largest application scale, the market penetration rate of mobile robot AMR is still less than 2%, and the usage rate of AMR will be just over 5% in the next 5 years, indicating that the whole market is still in the early stage of development, and there is huge room for future growth.
It is reported that Geek+ currently has 70% of its business conducted overseas. Unlike the Chinese market, which focuses on cost performance, Geek+ targeted its products as mid- to high-end products at the early stage of going abroad, and although the cost went up, it sold well to others. "When the annual shipment is over 50,000 units, not only is the cost space down, the industry's recognition of the solution will also have a greater change." Zheng Yong said.
However, industry competition is intensifying as more and more industry giants such as Alibaba, Gree and Hikvision enter the logistics robot field. Therefore, EqualOcean sees that while the industry is still in the early "reshuffling stage," the key to competitiveness is to continue to pay attention to competitive dynamics, find differentiated competitive advantages, and not only make breakthroughs in product technology, but also focus on building a localized team and partner network and other comprehensive strengths.