Amazon Robots to Rule the Warehouse

March 23, 2012
Distributors and manufacturers are always looking for methods to cut down on warehousing costs, but few have probably considered using robots to scurry down warehouse aisles, bringing products to workers.


Distributors and manufacturers are always looking for methods to cut down on warehousing costs, but few have probably considered using robots to scurry down warehouse aisles, bringing products to workers.

Amazon.com, Seattle, recently placed a big bet that robots can do exactly that. The company’s March 19 announcement that it purchased Kiva Systems Inc., North Reading, Mass., a provider of robotic material handling technology, for $775 million, is another sign that it’s spending major bucks on its global network of fulfillment centers to entice third-party vendors to utilize its package of web shopping, warehousing and shipping services.

Dave Clark, the company’s vice president, global customer fulfillment, said in a press release announcing the acquisition, “Amazon has long used automation in its fulfillment centers, and Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow.”

Kiva’s warehouse robots have caught the attention of the business press, as numerous articles are available online about how more companies now use robots to streamline their warehousing costs, as is a 2007 YouTube video, “The Dance of the Bots,” that shows Kiva robots programmed to dance to the holiday classic, “The Nutcracker.”

The Kiva acquisition is the latest example of Amazon’s plans to beef up its warehousing network. Recent news reports said Amazon spent $4.6 billion in 2011 on 17 new fulfillment centers to make life easier for third-party vendors that use its web, shopping, warehousing and shipping services in its Fulfillment by Amazon (FBA) program. A recent Bloomberg News article said products sold by outside vendors currently make up 36 percent of unit sales at amazon.com. In promoting the FBA program on its web-site, Amazon says, “You sell it, we ship it. Amazon has created one of the most advanced fulfillment networks in the world, and your business can now benefit from our expertise. With Fulfillment by Amazon you store your products in Amazon’s fulfillment centers, and we directly pack, ship, and provide customer service for these products.”

FBA pricing for order handling, picking and packing, weight handling per pound, special handling, and storage (per cubic foot per month) varies depending on the size of the product and whether or not an order is placed on amazon.com or other sales channels. For orders placed on amazon.com, third-party vendors pay $1 to pick and pack an item, 37 cents per pound for weight handling; and a minimum of 45 cents per cubic foot per month for storage. The Amazon fulfillment program also offers third-party vendors a variety of shipping options.

These warehouses stock much more than Kindles, books and CDs. You can buy anything from a sink faucet to a set of new tires for your SUV on amazon.com these days. W.W. Grainger Inc., Lake Forest, Ill., now has more than 32,000 items listed in amazon.com’s Electrical category, but the product listings’ links direct amazon.com shoppers to www.grainger.com and offers them the option of pick-up at a local branch or shipping.