Several of e-commerce giant Amazon.com Inc.’s (AMZN) warehouses seem to be invaded by an army of robots, as promised by Jeff Bezos, its chief executive officer (“CEO”). In May, Jeff Bezos, had announced that the company is expecting to deploy an army of nearly 10,000 robots at its warehouses worldwide by the end of 2014.
The robots are built by Amazon’s subsidiary Kiva Systems, which it had acquired two years ago for $775 million in a bid to increase the level of automation in its warehouses. The robots made by Kiva comprise mobile shelving systems that automatically transport items to workers.
The deployment of robots decreases the time taken to sort and pack products, thereby strengthening its same-day or overnight delivery services. A picker’s speed maybe expected to increase 3X, since Amazon expects each picker to scan at least 300 items an hour compared to 100 scanned previously.
The robots can help Amazon to easily cater to demand during the peak holiday season, when it has high customer traffic. The holiday season is crucial for Amazon as sales in November and December account for a major part of its annual revenues.
Moreover, with Amazon announcing bigger and better seller holiday deals this year, faster sorting and packaging operations have become essential.
Moreover, Amazon has been expanding its fulfillment centers around the world. The increase in the level of automation can help Amazon simplify operations, save time and reduce fulfillment costs.
Amazon seeks to be the most customer-focused company and therefore has been striving to beef up its delivery system in order to provide better customer services. In relation to these efforts, Amazon has plans to develop a drone-based delivery service wherein it will deploy airborne robotic drones to deliver packages to consumers in 30 minutes. In July, Amazon had requested the Federal Aviation Administration (“FAA”) for permission to fly drones out of their test facility.
While robots are already working at fulfilling orders in the warehouse, their broader use could be a few years out since current laws do not allow their private operation and Amazon likely doesn’t have a finished product just yet.
Other companies interested in this dynamic world of robotics include Google (GOOGL) and Facebook (FB).
Amazon holds a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Mercadolibre, Inc. (MELI), which carries a Zacks Rank #2 (Buy).
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