What Does it Mean Strategically That Amazon Robots cut “Click to Ship” Time From 1h to 15 Minutes?

2016-06-21 um 12.19.37

Quartz, rephrasing a Deutsche Bank note on the impact Kiva robots are having on Amazon’s warehouse logistics:

The “click to ship” cycle used to be around 60-75 minutes when employees had manually to sift through the stacks, pick the product, pack it, and ship it. Now, robots handle the same job in 15 minutes, according to a Deutsche Bank note published Tuesday (June 14) based on Amazon’s metrics.

These robots are not only more efficient but they also take up less space than their human counterparts. That means warehouse design can eventually be modified to have more shelf space and less wide aisles. At the end of the third quarter of 2015, Amazon was using 30,000 Kiva robots across 13 warehouses. Each Kiva-equipped warehouse can hold 50% more inventory per square foot than centers without robots. In turn, the company’s operating costs have been sliced by 20%—or almost $22 million—per warehouse.

This is affecting the bottom line, but that is not what is interesting here. (same as Walmart’s efforts regarding its bottom line are uninteresting regarding the big picture)

One interesting question is this: 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)

[Imagine here a sentence or two about drones, delivery and regulation.]

Amazon bought Kiva Systems in 2012 for $775 million. Prior to the acquisition, Kiva robots made headlines as being an essential part of Diapers.com’s warehouse setup. Amazon bought Diapers.com in 2010.

More information from the company itself can be found at the official website of Amazon Robotics.

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