

Regarding Amazon’s Kiva robots I wrote recently:

What will it mean to Amazon’s customers when the company can cut “click to ship” time from 60-75 minutes down to 15 minutes at more locations with more items? Think of how much more sustainable and (to us today, unbelievably) fast Prime Now shipments will become. And more so, how much further Amazon can extend Prime Now inventory in a shorter timeframe than the company could without automated warehouses. In this regard, another interesting question is how much the increasing automation of warehouses is going to help Amazon roll out a network of close-by warehouses around the countries the company is present in. Read that part of the necessary space again: “That means warehouse design can eventually be modified to have more shelf space and less wide aisles.” I can imagine many relatively small, fully automated Amazon warehouses becoming a reality in the near future. (less than five years)

Amazon bought Kiva Systems in 2012 for $775 million.

Bloomberg about what followed:

Such a move was unprecedented in warehousing: the mass withdrawal of one specific type of technology. Usually, one company would buy another and keep selling the tech to all the usual customers. That’s where the money was, after all. Not Amazon. It wanted the Kivas all for itself.

There can be learned a lot from Amazon’s Kiva move. Amazon’s long term thinking is always hailed in a positive light: How the company builds businesses, how it does investments. From the industry’s point of view, here’s the other side of that long-term-thinking coin: By relinquishing revenues that could have been made by selling Kiva robots to other retailers and warehouse operators, Amazon took a market leader and their technology off the market, giving themselves a headstart in logistics. In essence this was as much an offense move as it was a defense move.

Amazon watched Diapers.com create an efficient warehouse and logistics operation by heavily relying on Kiva robots. Two years after buying Diapers, Amazon not only bought Kiva for its internal needs but also to take that technology off the market, preventing another Diapers.com from rising, for the time being.

Since then, surprisingly little has happened in the market regarding making warehouses more automated. Given the recent rise in robotics and machine learning, this is bound to change. (The latter can help optimize in-warehouse routes.)

Bloomberg on startups trying to do just that:

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.

Automated, or even semi-automated, warehouse, once feasable, will become a significant booster for mid-level and large online retailers.

This, combined with a constant growth in online retail world wide, creates a market vacuum whose filling was only a matter of time.

Here are the robot warehouse startups:

Don’t be surprised when one or the other of this list gets bought by Amazon as well. (And, consequently, don’t be surprised if these companies attract strategic investors like Alibaba, Rakuten or Walmart, to prevent Amazon from doing it again.)

There is also this fascinating tidbit in the Bloomberg article:

In March, robotics companies flocked to a California resort for a secret conference hosted by Amazon. Over three sweltering days at the Parker Palm Springs, attendees were treated to talks and seminars on everything from artificial intelligence to space exploration. Representatives from Intel Corp. and Toyota Motor Corp., roboticists from all sorts of firms, and academics from nearby University of California-Berkeley and far away Zurich showed up. So did Bezos, who sipped single-malt whiskey, chatted with guests, and hit the conference stage wearing a robotic suit.

See also this Business Insider article on the topic:

Best Buy has begun using Chloe, a robot that retrieves products that customers request from a kiosk. And Target recently began a trial of Tally, a robot that travels through aisles and takes inventory.

By changing the cost floor and thus what can possibly be sustainable, robotics in warehouses will become a major (but largely invisible) driver of online retail in the near future. As I quoted above, this is not only about the bottom line. Businesses become possible that weren’t before.

Amazon Robotics, Kiva’s successor, is hiring at all levels.

More on this topic: