An unusually high amount of patents by Amazon have made headlines over the last few weeks.
What’s behind them? First, here’s a summary of some of the recent patents.
‘Flying Warehouses’ & Drones
The flying warehouses, zeppelins from which drones are meant to be dispatched, brought in the most headlines. Readwrite:
An Amazon patent, found by CB Insights analyst Zoe Leavitt, shows an “airborne fulfillment center utilizing unmanned aerial vehicles for delivery,” one of the wackiest ideas to come out of the e-commerce giant.
In the patent, Amazon shows a massive zeppelin above a city, deploying delivery drones. The zeppelin is stocked full of packages and re-supplied by smaller airships, which also transport recharged drones, workers, and packages.
The main airship would be 45,000 feet in the air, higher than most commercial flights. Drones would descend from the airship, saving a lot of energy, and return to smaller airships located outside of the city for refueling.
The patent reflects a complex network of systems to facilitate delivery by air. […]
The filing also reveals that the shuttles and drones, as they fly deliveries around, could function in a mesh network, relaying data to each other about weather, wind speed, and routing, for example
Amazon is not the only one thinking about dispatch systems consisting of different autonomous units working on different jobs. Mercedes recently presented a van with built-in drones and robot arms for delivering packages.
Amazon is thinking (and patenting) something similar for trucks and drones:
The application, filed by executives with Amazon’s Prime Air division in March 2015 and published Thursday, seeks to allow drones to hitch rides to get closer to their delivery destinations or return from completed deliveries. Doing this would conserve energy and give drone personnel options for emergency landings if problems with the aircrafts occur.
To make this work, Amazon suggests it could forge agreements with transportation agencies and shipping companies that could include compensation in exchange for permission to land drones on vehicles. Drones could use identifying markings and GPS coordinates to find vehicles to land on.
Last summer, Amazon patented a system where drone recharging stations were based on street lights.
But wait, there is more. Amazon patented a way for drones to link up to carry bigger packages.
Think about this in the context of Amazon automating its warehouses (‘fulfillment centers’). We wrote last year about what robots/automation means strategically for Amazon:
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)
The world’s largest e-commerce retailer said it employed 45,000 robots in some 20 fulfillment centers. That’s a cool 50 percent increase from last year’s holiday season, when the company had some 30,000 robots working alongside 230,000 humans. […]
“We’ve changed, again, the automation, the size, the scale many times, and we continue to learn and grow there,” Amazon Chief Financial Officer Brian Olsavsky said of the robots in a conference call last April. The executive said he couldn’t point to any “general trends” in the adoption of robotics, because some fulfillment centers are clearly “fully outfitted” in robots and “some don’t for economic reasons — maybe the volume’s not perfect for robot volume.”
An Underground Logistics Network
Motherboard reports on a subterranean delivery network Amazon patented:
Amazon’s latest logistical solution, revealed in this patent, is the strangest one yet, but hints at Amazon’s future of hyperlocal, customer-tailored delivery. The 33-page filing, submitted in 2014 but only granted last November, describes “dedicated network delivery systems” that avoid traffic congestion by going underground. According to the Amazon patent, such a system would “avoid congestion experienced by traditional transportation networks and enable the delivery of objects from an origin to a destination using one or subterranean or above ground elements.” […]
The patent goes on to outline networks of vacuum tubes, conveyor belts, and rails that would carry parcels, carts, and boxes in both vertical and horizontal directions. “A path between the origin and destination may be defined based on any factor, including travel time or cost, and any actual or predicted congestion,” says the patent. Illustrations show how the delivery network would link up Amazon’s warehouses with locker storage locations, airports, railway stations, and even customer homes.
Self-driving Cars and Trucks
A recently emerged patent, unsurprisingly, shows that Amazon also has self-driving car plans:
Amazon is working on self-driving cars, according to a new patent that deals with the complex task of navigating reversible lanes.
The patent, filed in November 2015 and granted on Tuesday, covers the problem of how to deal with reversible lanes, which change direction depending on the bulk of the traffic flow. This type of lane is typically used to manage commuter traffic into and out of cities, particularly in the US. […]
Amazon’s solution to the problem could have much larger ramifications than simply dealing with highway traffic in large cities. The patent proposes a centralised roadway management system that can communicate with multiple self-driving cars to exchange information and coordinate vehicle movement at a large scale.
As Recode has learned, Amazon’s self-driving delivery vehicles are borne out of its drone divison, Prime Air.
In December, the online retailer bought up thousands of its own truck trailers to deliver goods from one Amazon warehouse to another. It’s likely Amazon is thinking about its own self-driving ambitions — particularly since autonomous delivery trucks would eliminate the cost of hiring drivers.
Amazon is working on creating self-driving delivery vehicles out of its drone division, Prime Air, sources tell Recode. In fact, one of the listed inventors of the network, Jim Curlander, is the technical advisor at Prime Air.
Amazon conducted its first successful Prime Air drone delivery in the UK late last year.
In this regard, the Amazon Treasure Truck, also recently patented, is informative of the business models that may emerge, as we wrote last year:
Those trucks are a fascinating new endeavor by Amazon (or shall we say “Amazon startup”?). They combine the flexibility of smartphones to reach people locally with good old flash sales. Using trucks increases the addressable market -in contrast to an actual store! Getting the goods you just bought in the app from a nearby truck within minutes is perfect for impulse purchases.
What could a truck fleet be used for other than flash sales? How could this be combined with nearby Amazon locations and an Amazon Flex P2P delivery service?
Amazon is constantly expanding its Uber-like delivery service Amazon Flex. The company has said recently that it believes that Amazon Flex can create hundreds of thousands of jobs. (additionally to the new 100.000 full-time jobs Amazon recently announced)
Amazon’s rumored “Uber for trucking” app is ‘just’ the same model applied to a different part of the logistics route:
The app, scheduled to launch next summer, is designed to make it easier for truck drivers to find shippers that need goods moved, much in the way Uber connects drivers with riders.
We wrote a few weeks ago about Amazon ‘uberizing’ (sorry for that) logistics:
Building out logistics with software based matchmaking leads, if successful, directly to a service with the biggest customers being Amazon and Amazon Marketplace sellers. (Giving Amazon a head start on anyone else, like, say, Uber, trying to build the same.)
AWS, the obvious comparison on this abstract level, has long grown beyond its biggest customer.
Do you see the pattern yet?
There is an underlying challenge to Amazon and every other online retailer who is ambitious enough. Rethinking retail means rethinking how to get the goods from A to B. ‘Conventional’ last-mile providers like the local postal services, and companies like DHL, FedEx or UPS are increasingly not cutting it anymore. Same-day delivery is a challenge for them, same-hour delivery becomes impossible.
There is a huge market opportunity for Amazon here.
As a large online retailer, Amazon is the first and best customer of anything the company implements on the logistics side. But combined with the marketplace, Amazon can, in theory, lay the groundwork for a large logistics infrastructure used by a large percentage of online merchants who will do all or most of their business through Amazon’s various services. (Think ‘Amazon Tax’)
Cars themselves created Walmart. What may self-driving cars and trucks and drones lead to? A16Z-analyst Benedict Evans:
Removing the drivers from an on-demand car service cuts the cost, since you don’t have to pay them and also since lower accident rates mean cheaper insurance (though this applies to your own car too). But in addition, autonomous cars expand supply for on-demand services, since many more cars are available to be used for on-demand when their owners aren’t using them. This will creates all sorts of second-order effects and feedback loops. We saw the same thing with cars themselves: as Carl Sagan said, it was easy to predict mass car-ownership but hard to predict Wal-Mart.
Someone can build a logistics infrastructure specifically made for online retail. Why not Amazon then? We just don’t know how exactly this will look like.
Amazon has experimented with delivery services that make use of autonomous drones, bicycle couriers and branded fleets of airplanes and trucks. There’s talk of self-driving trucks, flying warehouses and a system that would let drones hitchhike on trucks and buses.
Brick-and-mortar retail meant people go to stores to select and buy products that where brought there by truck. After buying them, the customers carry the bought goods home themselves. Brands, whole companies like P&G, got build around the selection (and placement) in the store.
But all this is slowly evaporating before our eyes.
Think of online retail, as it manifests itself up until now, as the result of a logistics patchwork.
(Also, online retail is still working with brands born in the brick-and-mortar retail and mass-media world. This is also slowly but surely changing. Dollar Shave Club and Casper are only some of the best known examples of a fast growing number of new online brands, leveraging Facebook ads and marketplaces.)
How would you go model a genuine solution to replace or at least augment what we already have?
It’s tricky. Amazon’s headlines making patents are mixtures of thought experiments and land grabs. You can be sure that far more are on the way. Don’t get mixed up in the specifics of those thought experiments.
It is not about the specifics but about the mindset they collectively portray.
It is not the flying zeppelin warehouse that is awe inspiring. It is the mindset of a company that is very seriously rethinking the world we live in.
- How Amazon is Expanding its Uber-Like Delivery Service Amazon Flex
- This 5 Minute Video Shows How Amazon Prime Now Delivers Orders Within 2 Hours
- Deliver with Amazon: How Amazon Plans to ‘Uberize’ Logistics
- “Global Supply Chain by Amazon”: Disintermediation Will be the Name of the Game
- Bloomberg: “Global Supply Chain by Amazon” Planned To Start This Year, To Compete With UPS, DHL
- Global Scale Strategies: Amazon Providing Ocean Freight Services Is At First About Chinese Sellers