How Switched to Automation but Didn't Fire Anybody

This week, a massive new fulfillment center for — an online retailer selling wholesale items à la Costco — automated much of a time-sucking task: Picking. The job of walking through a cavernous warehouse to find an item to ship out takes valuable time. And while automation predictably results in layoffs, the company’s been very public about not only retaining every employee at its New Jersey center, but offering raises and benefits.

It seems charitable, but for the three-year-old startup, there was a business case for it.

“It must seem awfully ridiculous what we’re doing,” concedes Boxed co-founder and CEO Chieh Huang, 35. “You’re automating and you’re not like canning anyone? What the hell’s the point?’”

Huang tells Inverse the point is to train its employees to use the automated tools to do more work in less time. The company couldn’t get its big boxes out the door fast enough. By automating — notably using a three-story device called the Perfect Pick iBot by the Opex Corporation — it will move items faster through the 144,000 square-foot building near Newark International Airport. The project started nearly two years ago and took six months to integrate.

The 85 fulfillment center employees will be trained to operate and troubleshoot the robots, learning a newly marketable skill, Huang says. A company spokesperson says the average employee promoted to full-time from temporary received a 13 percent raise.

“Instead of just saying, ‘you’re not going to lose your job,’ I actually wanted this to be an opportunity for folks to learn a skill that’s going to be really important in the future,” Huang says.

Automation is seen as the great disruptor just around the corner. It was even memorably touched on by President Barack Obama during his farewell address: “The next wave of economic dislocation won’t come from overseas,” Obama said. “It will come from the relentless pace of automation that makes many good, middle-class jobs obsolete.” Conversely, Steven Mnuchin, President Donald Trump’s Treasury Secretary, said this in March about automation: “It’s not even on our radar screen…. 50-100 more years [away].”

As politicians remain on either side of the aisle, the industry moves forward. Huang’s vision for Boxed includes more fulfillment centers like the one in New Jersey.

“I can’t imagine there will be too many non-automated fulfillment centers in ten to fifteen years,” he says. “I just cannot. It’s just where everybody is going.”

We’re Still Far From a “Lights Out” Warehouse

Huang doesn’t think that fulfillment centers run by or giant in the market, Amazon — it has “more than 70” such centers in the U.S. — will become totally “lights out” any time soon. “Lights out” is the cryptic industry term for complete automation that paints a chilling picture of a factory buzzing in total darkness, powered by robotics and guided by RFID chips.

“Robots don’t need lights to operate,” Huang says. “There’s no humans anymore.”

But humans are still needed, and will be for some time. Why? Robot hands still suck.

The type of order placed with Boxed, Huang says, includes on average ten items that need to be packed into a big box. Nothing can match a human hand in packing, he says.

“You actually need the dexterity of a human hand in order to pack these boxes,” he says. “That’s probably why you see Amazon having their own X-Prize, to try to get someone to make a robotic arm and hand that can pack boxes. But it’s so far, far away right now.”

Huang’s employee-first approach preceded’s choice to train its employees to operate and troubleshoot robots instead of replacing them outright. The company famously opted to pay for employee weddings. And if Boxed’s growth continues — it’s crossed the $100 million revenue, he says — they’ll be a position to build more fulfillment centers and hire more people.

“This allows us to do more and hopefully it will give us room to grow and as we grow we’ll hire a ton more people,” Huang says.

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