Monthly Archives: July 2017

Next Leap for Robots: Picking Out and Boxing Your Online Order

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Developers close in on systems to move products off shelves and into boxes, as retailers aim to automate labor-intensive process

Your Next Online Order Could Be Picked Out by a Robot
Facing more pressure to speed orders more quickly to customers, a rising number of companies are using high-tech robots in their manufacturing process. But could it render humans obsolete? The WSJ takes a look inside.

Robot developers say they are close to a breakthrough—getting a machine to pick up a toy and put it in a box.

It is a simple task for a child, but for retailers it has been a big hurdle to automating one of the most labor-intensive aspects of e-commerce: grabbing items off shelves and packing them for shipping.

Several companies, including Saks Fifth Avenue owner Hudson’s Bay Co. HBC -0.27% and Chinese online-retail giant JD.com Inc., JD 1.07% have recently begun testing robotic “pickers” in their distribution centers. Some robotics companies say their machines can move gadgets, toys and consumer products 50% faster than human workers.

Retailers and logistics companies are counting on the new advances to help them keep pace with explosive growth in online sales and pressure to ship faster. U.S. e-commerce revenues hit $390 billion last year, nearly twice as much as in 2011, according to the U.S. Census Bureau. Sales are rising even faster in China, India and other developing countries.

That is propelling a global hiring spree to find people to process those orders. U.S. warehouses added 262,000 jobs over the past five years, with nearly 950,000 people working in the sector, according to the Labor Department. Labor shortages are becoming more common, particularly during the holiday rush, and wages are climbing.

Mechanical engineer Parker Heyl adjusts a robotic arm at RightHand Robotics’ test facility in Somerville, Mass.
Mechanical engineer Parker Heyl adjusts a robotic arm at RightHand Robotics’ test facility in Somerville, Mass.PHOTO: SIMON SIMARD FOR THE WALL STREET JOURNAL

Picking is the biggest labor cost in most e-commerce distribution centers, and among the least automated. Swapping in robots could cut the labor cost of fulfilling online orders by a fifth, said Marc Wulfraat, president of consulting firm MWPVL International Inc.

“When you’re talking about hundreds of millions of units, those numbers can be very significant,” he said. “It’s going to be a significant edge for whoever gets there first.”

Until recently, robots had to be trained to identify and grab each item, which is impractical in a distribution center that might stock an ever-changing array of millions of products.

Automation companies such as Kuka AG KU2 -0.45% , Dematic Corp. and Honeywell International Inc. unit Intelligrated, as well as startups like RightHand Robotics Inc. and IAM Robotics LLC are working on automating picking.

In RightHand Robotics’ Somerville, Mass., test facility, mechanical arms hunt around the clock through bins containing packages of baby wipes, jars of peanut butter and other products. Each attempt—successful or not—feeds into a database. The bigger that data set, the faster and more reliably the machines can pick, said Yaro Tenzer, the startup’s co-founder.

Hudson’s Bay is testing RightHand’s robots in a distribution center in Scarborough, Ontario.

“This thing could run 24 hours a day,” said Erik Caldwell, the retailer’s senior vice president of supply chain and digital operations, at a conference in May. “They don’t get sick; they don’t smoke.”

JD.com is developing its own picking robots, which it started testing in a Shanghai distribution center in April. The company hopes to open a fully automated warehouse there by the end of next year, said Hui Cheng, head of JD.com’s robotics-research center in Silicon Valley.

Swisslog, a subsidiary of Kuka, sells picking robots that can be integrated into the company’s other warehouse automation systems or purchased separately. The company sold its first unit in the U.S., to a large retailer, earlier this year, said A.K. Schultz, Swisslog’s vice president for retail and e-commerce. Mr. Schultz declined to name the retailer.

Previous waves of warehouse automation didn’t lead to sudden mass layoffs, partly because order volumes have been growing so fast. And automated picking is still at least a year away from commercial use, robotics experts say. The main challenge lies in creating the enormous databases of 3D-rendered objects that robots need to determine the best way to grip new objects.

RightHand Robotics co-founders Leif Jentoft, left, and Yaro Tenzer
RightHand Robotics co-founders Leif Jentoft, left, and Yaro Tenzer PHOTO: FOR THE WALL STREET JOURNAL

Some companies hope to speed development by making some research public.Amazon.com Inc. will hold its third annual automated picking competition at a robotics conference in Japan later this month. For the first time, entrants won’t know in advance all the items the robots will need to pick.

At the University of California, Berkeley, a team is simulating millions of attempts to pick 10,000 objects. Funded by Amazon, Siemens AG and others, the project is meant to build an open-source database for use in any automation system, said Ken Goldberg, the professor leading the project.

“With 10,000 objects, I’m surprised how well it did,” he said. “I would love to show it 100,000 examples and see how well it performs after that.”

Advertisers Try to Avoid the Web’s Dark Side, From Fake News to Extremist

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Marketers are reevaluating their approach to automated ad-buying and demanding more accountability

ILLUSTRATION: PETER AND MARIA HOEY

In February, Kieran Hannon, chief marketing officer of Belkin International Inc., noticed an odd tweet asking the electronics maker why it was advertising on Breitbart News Network, a right-wing website known for scorched-earth populism.

A banner ad promoting the company’s new Linksys mesh router had appeared on the site, even though Breitbart wasn’t among the roughly 200 sites Belkin had preapproved for its ads.

Mr. Hannon called his ad agency, which couldn’t explain the mix-up.

“We still don’t know how that happened,” he said.

Such headaches are becoming all too familiar for marketing executives, as they come to grips with the trade-offs inherent in automated advertising. Known as “programmatic” ad buying, it is now the way the vast majority of digital display ads are sold.

Programmatic advertising allows the buyer to target consumers across thousands of sites, based on their browsing history or shopping habits or demographics. Doing so is more cost-effective than buying more expensive ads on a handful of well-known sites.

But marketers don’t fully control whether their ads will show up in places they would rather avoid: sites featuring pornography, pirated content, fake news, videos supporting terrorists, or outlets whose traffic is artificially generated by computer programs.

The confusion stems from the convoluted infrastructure of the ad-technology world: a maze of agencies, ad networks, exchanges, publisher platforms and vendors. Instead of buying space on websites, brands can buy audiences—categories of people—and their ads are placed on sites those people visit.

The problems arise when those people are on sites where brands don’t wish to appear.

The Tangled World of Digital Ads

Online advertisers and their partners can generally target specific groups of users based on certain characteristics. But their ads can still wind up in undesirable places.

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As the issues pile up, marketers are taking action, with the help of companies that independently verify that their ads aren’t going to toxic locations. Brands are cutting down their purchase of ads through open exchanges—public pools of ad space from hundreds of thousands of sites—opting instead for methods that give them more visibility into where ads are appearing.

On open exchanges, it “just becomes harder and harder to figure out if your ad is showing up in a legitimate ad experience,” said Kristi Argyilan, senior vice president of marketing at retailer Target Corp.

Marketers have been dealing with these issues for years. But the “brand safety” risks in digital advertising have hit home with multiple high-profile episodes in recent months.

In March, a number of big brands including PepsiCo Inc., Wal-Mart Stores Inc. L’Oréal SAand AT&T Inc. pulled their ads from YouTube and the Google Display Network, a network of third-party websites, after revelations that ads ran alongside objectionable content, including videos promoting anti-Semitism and terrorism.

Google, a unit of Alphabet Inc., promised to better police its content and give marketers more information about where their ads appear on YouTube. It also said it would bolster its technology that automatically screens videos, and it set a 10,000-view threshold for a video channel to reach before it can make money from ads.​

Some advertisers, satisfied with Google’s efforts, have begun spending again, while others, including big marketers such as SC Johnson & Son Inc., Procter & Gamble Co. and J.P. Morgan Chase & Co., haven’t returned, according to people familiar with the matter.

J.P. Morgan is working with Google to get its ads back on “safe YouTube channels” and expects to return soon, one of the people said.

P&G is working closely with YouTube to test the safeguards it has put in place since the problems arose, a spokeswoman for the company said. A spokeswoman for SC Johnson declined to comment.

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“Many advertisers never left and many have decided to come back,” Google said in a statement. “While they know that no system can be perfect, they appreciate the actions we’ve taken and know we are taking this seriously and are committed to getting better and better.”

Though the number of ordinary web users who saw an ad in an offensive YouTube video was likely small, the combination of the public-relations damage from the revelations and the potential for more widespread exposure down the road led marketers to act.

Breitbart, which is popular with the “alt-right”—a loose conglomeration of groups, some of which embrace white supremacy and view multiculturalism as a threat—became a controversial landing spot for advertisers in the wake of the 2016 presidential election. Brands that have pulled out of Breitbart include Kellogg Co., eyewear company Warby Parker and insurer Allstate Corp.

A spokesman for Breitbart declined to comment.

The recurring issues have caused brands to adjust their overall approach to automated ad buying.

Colgate-Palmolive Co. is adding language to the contract it has with its ad-buying firm, which requires it to maintain blacklists of sites the company doesn’t want to have its ads appear on, according to people familiar with the matter. Colgate didn’t respond to requests for comment.

We needed to make sure our ads are showing up where our ads make contextual sense.

—Chris Drago, Hewlett Packard Enterprise’s senior director of global media

Advertisers are doubling down on using online ad verification services such as Integral Ad Science Inc. and White Ops Inc.

OpenSlate, which helps advertisers vet YouTube channels, currently works with roughly 230 advertisers, more than twice as many as last year. “The interest in finding out where your ads are running and who saw your ad has skyrocketed over the past three months,” said OpenSlate CEO Mike Henry.

More marketers are purchasing ads through “programmatic direct” deals, in which a publisher uses technology to sell directly to advertisers, and “private programmatic marketplaces,” in which a publisher or a select group of publishers can sell to a select group of advertisers, in real time. Automation is involved in both, but the risks are far lower than with open exchanges.

Display-ad spending on programmatic direct deals in the U.S. is expected to grow by 35% this year to $18.2 billion, while spending on private marketplaces will increase 39% to about $6 billion, according to eMarketer. By contrast, spending on open exchanges is forecast to grow by 8.4% this year to $8.3 billion.

Target pulled back from buying via open exchanges at the end of 2015 and now uses private marketplaces to buy ads from about 160 different publishers.

Hewlett Packard Enterprise, which spun out from Hewlett-Packard Co. in 2015, set up private marketplaces with about 15 publishers including Forbes and CNN about a year ago.

“We needed to make sure our ads are showing up where our ads make contextual sense,” said Chris Drago, the company’s senior director of global media. “I don’t want to be on Victoria’s Secret because someone is there buying bras for his wife.”