Amazon's Kiva Systems Acquisition To Put Robots To Work

* Kiva robots move products around e-commerce warehouses

* Will make Amazon warehouses more efficient - analyst

* Amazon warehouses traditionally less automated

By Alistair Barr

March 19 (Reuters) - Amazon.com Inc said on Monday it agreed to buy Kiva Systems Inc for $775 million in cash, a deal that will bring more robotic technology to the e-commerce company's giant network of warehouses.

The acquisition, which has been approved by Kiva's stockholders, is expected to close in the second quarter of 2012, Amazon added in a statement.

Kiva develops robots that zip around warehouses, grabbing and moving shelves and crates full of products. The technology helps retailers fulfill online orders quickly and with fewer workers. Companies including Gap Inc, Staples Inc and Crate & Barrel, have used the technology.

Amazon has traditionally used more employees in its warehouses, or fulfillment centers as they are known. However, Kiva's robots have been used by other e-commerce companies acquired by Amazon in recent years, such as Quidsi and Zappos.

"This is a way to improve efficiency," said Scott Tilghman, an analyst at Caris & Company. "Given the scale of Amazon's operations, it makes sense to have this capability in house."

Fulfillment centers are crucial to Amazon's main online retail business. But the company also offers fulfillment services to other merchants, making the warehouses even more important.

"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," said Dave Clark, vice president, global customer fulfillment, at Amazon.com.

Amazon has been spending more on fulfillment in recent years as the company opened lots of new warehouses to handle the rapid growth of its business.

Fulfillment costs as a percentage of revenue rose to more than 9 percent in 2011, from just over 8 percent in 2010, according to Aaron Kessler, an analyst at Raymond James.

"That's been a big focus for investors recently," Kessler said. "It's a big cost. They are shipping so much and increasing volume so they need to figure out how to get more leverage out of these fulfillment centers."

Comments

[brandon20678]

06:45 AM on 03/21/2012

This should Help Amazon. Now my packages will come even faster

[DRaymond]

02:47 PM on 03/20/2012

Read up on what it is like to be a picker in a fulfillment warehouse.  It is a physically wearing and injury prone job.  In the Kiva system people are still needed to pack the boxes and to unload merchandise arriving from manufacturers onto the Kiva System racks.  but the part of the job which is the most grueling, rushing all over the factory pushing a cart, is eliminated.

[evilgoogleman]

06:57 AM on 03/20/2012

Employment numbers are never going back up. Jobs are running at full speed away from humans and away from the US. Good Luck America, you are going to need it.

[DRaymond]

02:51 PM on 03/20/2012

That is what a lot of people are missing when they complain about the hundreds of thousands of jobs Apple sent to China.  If Apple brought that manufacturing back to the US it would most likely employ a twentieth the number of people and most of them would be in robotics engineering, repair and maintenance.

[evilgoogleman]

03:40 PM on 03/20/2012

Yeah, if this is not a sign that the system is about to fall apart, I don't know what is. Time to rethink the way humanity does things.

[i s a a c]

02:36 AM on 03/20/2012

What's wrong with taking advantage of technology to decrease human exposure to risk and injury? This should be another wake up call to invest in education... Americans should be leading the wave of INVENTING this technology, repairing and maintaining it, not grumbling that their skill set is so rudimentary that a machine can do it. But that workforce transformation is impossible without the training and education needed to get an entire generation there.

[Karelh]

09:59 AM on 03/20/2012

meanwhile we keep cutting education, making class sizes larger and larger...the whole education system is in the toilet, and it seems to be stuck in permanent flush mode...which can pretty much be said for most of our economy and any real hope for a recovery.

[Epilef2000]

10:23 PM on 03/20/2012

Well said!

To paraphrase physicist Neil Tyson, American innovation and technology will create jobs that can't be outsourced and create entirely new industries.

[Zilo]

01:44 AM on 03/20/2012

I guess that's supposed to be good, but with so many jobs going robotic, pretty soon these companies are going to see dips in sales. People can't buy anything when they don't have a job.

[bmldisp1001]

07:53 PM on 03/25/2012

True. On the other hand, we've been eliminating jobs via automation for centuries now. By all accounts, our unemployment rate should be 99.9%, not 8%.

http://technologydimensions.blogspot.com/2012/03/waiting-for-end-of-world.html

[Zilo]

08:46 PM on 03/25/2012

You have a point, but I think it is the combination of massive political division and a failing public school system that makes this time different. That is, unless we can change those things.

[SitandStay]

01:42 AM on 03/20/2012

Anything to get rid of those pesky humans.