An Amazon warehouse is a flurry of activity. Workers jog around a manmade cavern plopping items into yellow and black crates. Towering hydraulic arms lift heavy boxes toward the rafters. And an army of stubby orange robots slide along the floor like giant, sentient hockey pucks, piled high with towers of consumer gratification ranging from bestsellers to kitchenware.
Those are Kiva robots, once the marvel of warehouses everywhere. Amazon whipped out its wallet and threw down $775 million to purchase these robot legions in 2012. The acquisition effectively gave Jeff Bezos, its 52-year-old chief executive, command of an entire industry. He decided to use the robots for Amazon and Amazon alone, ending the sale of Kiva’s products to warehouse operators and retailers that had come to rely on them. As contracts expired, they had to find other options to keep up with an ever-increasing consumer need for speed. The only problem was that there were no other options. Kiva was pretty much it.
It’s taken four years, but a handful of startups are finally ready to replace Kiva and equip the world’s warehouses with new robotics. Amazon’s Kiva bots proved this kind of automation is more efficient than an all-human workforce. The new robots being rolled out look different, partly because the industry is still experimenting and partly because of patent issues. Some focus on picking items off shelves, others zoom around with touch screens. All are aimed at saving retailers money as they race to get their wares to your doorstep as quickly as possible.
Amazon has about 30,000 Kiva robots scuttling about its warehouses across the globe. Dave Clark, the retailer’s senior vice president of worldwide operations and customer service, estimated the addition of the bots reduced operating expenses by about 20 percent. According to an analysis by Deutsche Bank, adding them to one new warehouse saves $22 million in fulfillment expenses. Bringing the Kivas to the 100 or so distribution centers that still haven’t implemented the tech would save Amazon a further $2.5 billion.
“To be great in e-commerce, you need to be sophisticated inside the warehouse,” said Karl Siebrecht, chief executive at Flexe, which bills itself as the Airbnb for warehouse space.
. . . .
But it’s really only Amazon that has this kind of technology at scale, thanks in large part to Kiva. The world’s biggest retailers, including Wal-Mart Stores Inc., Macy’s Inc., and Target Corp., have yet to populate their warehouses with widespread robotic systems. They rely on the old method—otherwise known as humans: Hordes of pickers and packers who send boxes down conveyor belts.
. . . .
“I have as no idea if this is as far as Amazon wants to take it,” said Jason Helfstein, an analyst at Oppenheimer & Co. “Do you get into autonomous vehicles? Self-driving trucks?”
. . . .
In June, [Bezos] divulged that Amazon has been working on artificial intelligence for four years and now devotes more than 1,000 staffers to it. “It’s probably hard to overstate how big of an impact it’s going to have on society over next 20 years,” he said.
Link to the rest at Bloomberg and thanks to Matt for the tip.