Kiva Systems, Inc. for around $775 million in cash. Kiva makes warehouse robots. They're sturdy, orange little droids shaped like a toaster on its side, and the various models can lift and carry 1,000 pounds or more. Kiva's automatons and control software help warehouses streamline the management of their inventory.Yesterday, Amazon announced its acquisition of
Amazon was already using the robots to keep its massive fulfillment centers organized, as were big-time customers including Crate & Barrel, Office Depot, Saks Fifth Avenue, Staples, Toys 'R' Us and Walgreens. They're also used by Zappos.com and Diapers.com, other Amazon properties. It's another big expenditure for Amazon as its profits sink, but there are major efficiencies to gain here.
The Kiva robots can carry huge racks of warehouse inventory, so workers don't have to walk miles a day shuffling things around. The people can stay in one place, taking care of the small and complex tasks like sorting, while the robots handle the large loads and the long distances.
That's a more efficient use of time and energy. But does that mean Amazon will need fewer people to run the fulfillment centers?
An Amazon spokeswoman told the Wall Street Journal that no jobs will be eliminated as a result of the deal. Amazon employes over 56,000 people, but it doesn't disclose how many of those work in fulfillment centers. The warehouses also require thousands of temporary workers, especially during peak holiday periods. With 69 of these massive facilities largely run by hand, Amazon is surely looking to robots as a more efficient option.
The acquisition is not just a way to cut costs. Each Kiva system costs millions of dollars, and Amazon will now be selling them to other companies.
But the long-term significance of the deal is about Amazon streamlining its own systems. Amazon has been investing heavily in facilities, including 17 new fulfillment centers last year. It's also taking losses on every Kindle Fire sold, planning to make it up in media sales over time. It has to take up some slack somewhere.
At Amazon's scale, the business is all about efficiency. Amazon's Web services allow it to manage almost every step of the online retail process, but the rubber hits the road in the fulfillment center. The only way for Amazon to move boxes as efficiently as bits - or close to it - is by supplementing its human workers with the busy choreography of warehouse droids.
Photo: Joel Eden Photography/Kiva Systems