A Khosla Ventures-backed startup's technology is being utilized by Amazon to operate robot warehouses at Whole Foods.

• Fulfil, a Khosla Ventures-backed startup, is providing robotics technology to Amazon for testing a new micro-fulfillment center concept at a Whole Foods supermarket.
• An automated warehouse will be attached to a Whole Foods supermarket to offer customers products from non-typical brands.
• The technology could help drive more foot traffic in Whole Foods stores.

CNBC has learned that the retailing giant is partnering with a Khosla Ventures-backed startup that just came out of stealth last year, as it looks to add more automation into its supermarkets.

Amazon is testing a new idea at a Whole Foods store in a Philadelphia suburb by attaching a micro-fulfillment center to the store, enabling customers to buy non-organic staples that are not usually available there.

The facility utilizes warehouse automation technology from Fulfil, a San Francisco-based startup that creates robotic systems for grocers and other retailers, according to a source who requested anonymity due to the confidentiality of the plan.

Anand Varadarajan, head of Amazon's global grocery business, demonstrated Fulfil's technology at a recent press event near an Amazon warehouse in Nashville, Tennessee. The video showed robots retrieving trays of soy sauce, canned pineapple, and coffee pods from shelves and passing them to other robots equipped with grocery bags.

The video does not mention Fulfil's technology, but the system resembles the contents of a demo video on Fulfil's website.

Amazon and Fulfil CEO Mir Aamir both declined to comment on whether Amazon is using Fulfil's technology.

The Information reported earlier on Amazon testing Fulfil's technology.

In February 2023, Fulfil emerged from stealth and announced that it had raised $60 million in a round led by Eclipse Ventures, with participation from Khosla Ventures and DCVC. Prior to working with Amazon, the company had been testing its technology with California-based retailer Lucky, which is owned by regional grocer Save Mart, and is also an Amazon grocery delivery partner.

Amazon is currently hiring engineers and factory operators in Plymouth Meeting, Pennsylvania, where its Whole Foods store is being piloted with technology. According to Tony Hoggett, who leads Amazon's worldwide grocery business, the facility is expected to become operational within the next year.

Whole Foods has a "No List" of hundreds of ingredients that it bans from selling, which means that shoppers cannot find certain products such as Coca-Cola and Kellogg's cereals on its shelves. However, Fulfil's technology will allow shoppers to purchase these staples from brands that are not stocked at Whole Foods.

In Plymouth Meeting, a system is being tested that allows shoppers to order items from Amazon's website and its online grocery service, Amazon Fresh, while browsing Whole Foods. They can pick up their purchases as they check out in the store.

A Whole Foods store would have a small automated warehouse attached, with robots fetching and transporting items like socks, soda bottles, and tennis rackets, and placing them into bags for pickup.

According to a study by market research firm Drive Research, the average American shops at two different grocery stores per week to maximize cost savings, shop from a broader range of products, or take advantage of different promotions. Hoggett wrote in a blog post that Amazon is aiming to reduce the number of extra trips shoppers make to other grocery stores by eliminating the need for them.

For the past seven quarters, Amazon's physical stores unit, comprising Whole Foods and Fresh, has experienced sales growth in the single digits.

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