Amazon has been under pressure from some investors to boost its bottom line. One thing is certain; the company is good at generating buzz at opportune times. This year, it’s talking about the robots it’s using to help fill orders.
The Huffington Post story by Timothy Stenovec pointed out that in 2013 Amazon was talking about using drones. This year, it’s robots:
This year, Amazon appears to be trying the same thing again — only this time, it’s with robots. The company recently invited a select group of journalists — I was not one of them — to tour one of its California warehouses and watch robots move 750-pound shelves of products. Amazon says it uses 15,000 such robots in its facilities, and that the machines, a result of Amazon’s $750 million purchase of robot-maker Kiva Systems in 2012, will cut costs, save you money and help get products to you faster.
There was no news of Amazon’s robot fleet until just after midnight on Monday, when suddenly a flood of stories appeared — suggesting that the news was “embargoed,” a term for the common media practice of agreeing not to publish certain information until a certain time.
Both MSNBC and Bloomberg did multiple TV reports from the California warehouse on Monday, providing updates on the robots — a technology that Amazon uses in only10 of its 109 fulfillment centers worldwide, all of them in the U.S., according to the Associated Press.
All of this comes as Amazon is girding for a busy holiday shopping season. The company has disappointed investors this year, with stock down almost 17 percent over the last 12 months. On Monday, the credit rating service Moody’s lowered its outlook on Amazon from “stable” to “negative” due to the news that the company was issuing new debt.
In the press release announcing the status change, Moody’s Vice President Charlie O’Shea pointed out that Amazon faces “increased competition from brick-and-mortar retailers as they morph their successful businesses online.”
Bloomberg Businessweek’s Sam Grobart had a short piece about the robots and how they’re being used:
Much of that work will be done by robots, in many cases ones made by Kiva, a manufacturer purchased by Amazon.com (AMZN) in 2012. A Kiva robot looks less like C-3PO and more like an ottoman on wheels. They scurry around a warehouse floor, lifting and moving racks of merchandise to humans who can box an item up and place it on a conveyor belt to the delivery truck.
The rolling Kivas are far more efficient than walking humans. In a typical warehouse, a worker might walk several miles a day, just to go back and forth retrieving things. In more automated facilities, the people stay in one place, and the robots do the legwork. The machines are guided by tape markers on the floor and can scan individual racks to confirm they’re moving the right one.
MarketWatch had a story by Jennifer Booton that added these details and pointed out Amazon isn’t ready to replace humans just yet:
They also have eliminated the need for aisles, allowing Amazon to store items on all four sides of its inventory pods and store 50% more items per square foot than before.
Despite popular belief, Amazon is not seeking to replace humans, said Clark. Rather, the robots sliding along Amazon’s floors act more like an army of rolling assistants, alleviating the need for humans to walk around like madmen pulling inventory from Amazon’s library stack-like shelves.
“Our focus is to put in automation that supports people to better do their jobs,” Clark said. “This building has over 20 million inventory units. It’s a massive footprint to pull people’s orders from.”
Currently, the Kiva robots are in 10 of Amazon’s 50 U.S. fulfillment centers. The company has 109 centers globally.
David Streitfeld wrote for The New York Times that Amazon is working hard to pull in customers and keep them:
Sometime last summer, a quarter-billion dollars went missing at Amazon.
Analysts were expecting the usual gangbusters third quarter. But it was about $250 million short of forecasts.
Here is one way to look at the disappointing results: Amazon, for all its heft, is starting to lose momentum. It was rejected by some customers who were put off by its acrimonious dispute with the publisher Hachette over e-books, while others found its prices less compelling than they once were.
But few things about the retailer are ever clear-cut, so here is another interpretation: Amazon is intentionally cannibalizing some major product lines — offering free or nearly free music, video and e-books — to draw tens of millions of people into its ecosystem.
Far from being weak, Amazon in this view is so strong that it is disrupting not only other retailers but also itself, knowingly and eagerly, as it seeks to leverage its powerful e-commerce operation to become a retail and entertainment colossus. It wants to sell devices, entertainment and services as well as basics like milk and toilet paper.
“Everything you buy, starting with your weekly groceries, will be flowing through one pipe called Amazon,” said Scott Galloway, a professor of marketing at New York University’s Stern School of Business. “They’ll have your credit card purchase history, be able to do data-mining on your needs, offer massive selection with a reputation for low prices.”
So it’s generating buzz to pull in more customers to become the go-to retailer for items from gifts to the everyday necessity. Sounds like something that stores have been trying to do for all time. The interesting part is that Amazon seems to be best positioned to actually pull it off. Press generating technology aside, investors are looking to see that the company can turn a profit.
