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Business Models That Work for Robot-as-a-Service Companies in 2019

diverse business models of robots-as-a-service
Diverse Business Models of Robots-as-a-Service
Robot-as-a-Service (RaaS) is a compelling value proposition for users and a game-changing strategy for robotics companies. In this year-end report for 2019, we look at the diverse business models employed by different Robot-as-a-Service players in different market segments.
robot-as-a-service by industry
Number of Robot-as-a-Service (RaaS) companies by market segment based on search sample (data source)
The top five segments for robot-as-a-service (RaaS) plays are delivery robots, cleaning robots, factory robots, warehouse robots and security robots. These are markets where there are clear existing costs, such as performance fees (e.g. delivery fees) or hourly labor wages (e.g. cleaners and security guards) which robot-as-a-service models can disrupt and optimize upon.
To learn more about the types of Robot-as-a-Service robots deployed and key players in these industries, read our other report on 2019 Robot-As-A-Service Companies (RaaS) - State Of The World.
In this article, we will look at the business model considerations of the RaaS business and survey the business models of key RaaS players, with the following content structure (10-minute read):
  1. Who can afford to offer "RaaS"?
  2. Here Comes The Pilot..
  3. By industry
    1. Delivery Robots-as-a-Service
    2. Cleaning Robots-as-a-Service
    3. Security Robots-as-a-Service
    4. Factory Robots-as-a-Service
    5. Warehouse Robots-as-a-Service
  4. Quick Industry Links

Who can afford to offer "RaaS"?

One example of a RaaS company is Kindred, which specializes in versatile, high-performance piece-picking robots.
Benefits. Robot as a service offers compelling benefits to both customers and robotic firms. Customers can immediately use these robots in production without hefty upfront expenses, freeing up capital for other projects. RaaS providers gain a sharp edge over CAPEX-based competitors, accelerate market share and strengthen their foothold onto the customers’ operations.
In other words, the RaaS strategy can help robotic companies acquire customers with higher success and at a faster pace.
RaaS is a moat. However, the underlying challenge is that RaaS companies require a higher startup capital vis-à-vis CAPEX-based built-to-order robotic firms. Yet, for companies that have implemented RaaS successfully, it is this exact challenge that creates a widening moat for competitors that lack the financial and operational wherewithall to run with this strategy.
RaaS 101. Aside from research and development challenges, these are the some considerations that startups grapple with at the outset of their robotic ventures.
Target Market: Are we inventing a new service category or disrupting an existing one? Is the demand for our RaaS offering ripe, premature or soft? What is the size of the addressable market?
Fleet Size: What is the initial robot fleet size needed to serve the market? Target fleet expansion rate?
Risk and Regulation: What are the legal liabilities and insurance requirements of operating a robot fleet? What are the regulatory limitations across countries, cities and jurisdictions?
Financing: Do we raise investment or tap into debt financing? What are the initial robot production costs and the expansion costs for team and operations? How do we sustain negative cash flows in the initial months and for how long?
Business Model: What are the fixed and operating cost models? What are the costs to fulfil the RaaS service-level agreement (SLA) for this market? What are the competitive pricing and revenue models?

Here Comes The Pilot..

Unfortunately, answers to the above are not easy to come by. Thus, most startups begin with a pilot or a trial to discover the answers.
"Consumer" Pilots. For consumer-oriented businesses, startups may need to work with supply partners such as a grocery chain or an e-commerce brand. For wide-area pilots, startups will need to identify suitable locations with friendly local authorities who would permit the deployment of the autonomous robots on the streets.
One example is Robot as a Service startup Robomart, which is running a grocery-on-wheels pilot with Stop & Shop to serve shoppers in the Boston area (source).
Enterprise Trials. For RaaS startups targeting enterprises, it could be collaborating with an anchor customer, such as a manufacturing or logistics company, for a trial run to prove to the anchor customer and the market the value of the RaaS solution.
One enterprise-focused RaaS example is germany-based Magazino, which ran a pilot project with PUMA to demonstrate how its mobile picking robot, TORU, can pick and retrieve shoe boxes from warehouses for fulfilment (source).
Pilot Funding. In a good case, the pilot could be funded by direct seed funding from the customer, government grants or angel investment. For more bootstrapped startups, the support will likely come from the founders, friends and/or families.
But, the goal is clear - the startup must gather enough data from the pilot(s) to model the market and answer the questions above before they can raise bigger investments to fully scale their Robot-as-a-Service deployments.

Current Robot-as-a-Service Business Models

Here are some of the current Robot-as-a-Service business models by market segments.
1DELIVERY ROBOTS-AS-A-SERVICE
delivery robots-as-a-service
Delivery Robot-as-a-Service Solutions
Delivery RaaS by Service Range. Autonomous delivery vehicles (ADVs) can travel on public roads and are able to handle city- or town-range deliveries (5-20km radius), while local delivery robots serve a 5-6km radius, delivering for neighborhoods and campuses using sidewalks and small-roads. On-premise delivery robots deliver food or carry packages within a premise, such as a restaurant, hotel or hospital.
list of delivery robot-as-a-service companies
List of Delivery Robot-as-a-Service Companies (source)
Pilot Goals. Pilots help RaaS startups validate price points and uncover patterns such as daily round trips, number of deliveries per round trip and demand peaks/troughs. Startups can observe the ease (or difficulty!) for users to retrieve correct packages from the robots and thus, affirm or continue to improve robotic designs. There are also regulatory and legal liability issues to explore with local authorities on public-road and sidewalk usage.
Business Models. ADVs and local delivery robots target to disrupt the manual-delivery market and thus, compete on per-delivery fees (US$4-6 for ADVs, US$2-4 for local delivery robots). Companies, like Robomart and AutoX, further enable users to purchase items directly from in-vehicle stores. On-premise delivery robots seek to reduce the need for service labor (e.g. waiters, porters) and thus, peg their fees to compete with human wages at USD$1.5 - $2k monthly.
Find out more about these delivery RaaS companies and their specific business models in this list of delivery robot-as-a-service companies worldwide.

2CLEANING ROBOTS-AS-A-SERVICE
cleaning robots-as-a-service
Cleaning Robot-as-a-Service Solutions
Business Models. In general, there are three domains of cleaning robot-as-a-service - (1) robots that can perform commercial floor cleaning or scrubbing, (2) robots that can handle window or facade cleaning and (3) robots that perform general housekeeping and clean rooms and interiors. As these robots are "hired" to replace or supplement cleaning labor, they are priced at competitive labor rates, from hourly fees (US$4-$6 per hour) to monthly charges (US$215 to 1.5K per month).
list of cleaning robot-as-a-service companies
List of Cleaning Robot-as-a-Service Companies (source)
Pilot/Trials. Cleaning RaaS companies may provide trials to convince customers of the efficacy of their cleaning robots. For example, Wall Robotic's trial program enables customers to purchase a one-time discounted window-cleaning service for trial or alternatively,lease their window cleaning robots for free.
Find out more about cleaning companies such as Avidbots, Skyline Robotics, Mira Robotics and others) and their RaaS business models in this list of cleaning robot-as-a-service companies worldwide.

3SECURITY ROBOTS-AS-A-SERVICE
security robots-as-a-service
Security Robot-as-a-Service Solutions
Types of Security Robots. Indoor security robots roam offices autonomously, performing heat scans in the premises and face/badge scans for personnel identification. Outdoor security robots are equipped larger wheels for wide-area patrol, car licence plate scanners and 360° HD cameras for full environmental scans.
list of security robot-as-a-service companies
List of Security Robot-as-a-Service Companies (source)
Business Model. Security RaaS seeks to supplement the manned security industry where there are shortages in manpower and increased expectations in security performance. The security RaaS model is typically on a monthly rental basis, with each security robot costing from a low fee of US$1.5K per month (such as the S5.2 outdoor security robot from SMP Robotics) to as high as US$10K per month (O-R2 and O-R3, indoor and outdoor security robots from OTSAW Digital).
Find out more about the security RaaS companies (Cobalt Robotics, Knightscope and others) and their business models in this list of security robot-as-a-service companies worldwide.

4FACTORY ROBOTS-AS-A-SERVICE
factory robots-as-a-service
Factory Robot-as-a-Service Solutions
list of factory automation robot-as-a-service companies
List of Factory Automation Robot-as-a-Service Companies (source)
Types of Factory Robots. With global initiatives on smart manufacturing, such as Industry 4.0 and "Made in China 2025", in high gear, one of the key trends in factory automation is the adoption of Cobots (or Collaborative Robots) and a diversity of robot types for different stages of manufacturing.
Business Models. There are several variants of the pay-as-you-use model here - from monthly rental (e.g. Mobile Industrial Robots MiR's MiR100 AMR is charged at US$711 per month), to pay per productive hour ranging from US$15 to US$33 per productive hour to pay per intelligent action (e.g. intelligent actions performed by Kindred's SORT robot).
Find out more about these factory automation RaaS companies and their specific business models in this list of factory automation robot-as-a-service companies worldwide.

5WAREHOUSE ROBOTS-AS-A-SERVICE
warehouse robots-as-a-service
Warehouse Robot-as-a-Service Solutions
list of warehouse automation robot-as-a-service companies
List of Warehouse Automation Robot-as-a-Service Companies (source)
Types of Warehouse Robots. Warehouse management is one of the major industries that is being automated at a blazing speed - from fetching items around the warehouse, to sorting and shelving , to picking and packing, and eventually shipping off. Picker-as-a-service players include InVia Robotics, Magazino and Geek+ Robotics. Warehouse AMRaaS (Autonomous Mobile Robot as a Service) players include 6 River, Fetch Robotics, Locus Robotics and Ronavi Robotics.
Business Models. The business model for picker-as-a-service is usually on a per-pick basis, ranging from 6 cents to 10 cents per pick, while AMR-as-a-service is usually leased on a monthly basis, from US$711 per robot per month to several thousands of dollars per month, depending on the commitment period.
Find out more about these warehouse automation RaaS companies and their specific business models in this list of warehouse automation robot-as-a-service companies worldwide.

Quick Industry Links (TLDR)


Conclusion

In this year-end report for 2019, we have compiled and looked at Robot-as-a-Service business models for the various market segments. We will continue to update this special report next year for 2020. You may also like to check our other robotics report, 2019 Robot-As-A-Service Companies (RaaS) - State Of The World, which surveys the key RaaS players in the various market segments for 2019.

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