Amazon’s (AMZN) retail business has reshaped the economy, workforce, and world as we know it — but now, robots are reshaping Amazon.
Yahoo Finance’s series Next takes a look at these robots in action, from Proteus and Hercules to Robin and Sparrow. These mechanical critters move thousands of pounds through warehouses, sort millions of packages for shipping, and even save on cardboard waste.
But behind these robots are humans who are building the next-generation business model for e-commerce.
These executives, scientists, and employees are on a mission to automate the company’s fulfillment system. Through Amazon’s warehouse robots, we get a rare glimpse into tomorrow’s Amazon, today.
Robots are the roots under Amazon's growth
Amazon’s like an iceberg — whatever you see, there’s a lot more under the surface.
It’s a giant that owns giants, from its cloud business AWS to Whole Foods and One Medical. Its advertising business, still in its infancy, generates $30 billion annually. It's in your home, from smart speakers and tablets to video streaming and doorbell alarms.
But underneath the water is the ruthless focus on efficiency and early investments in technology that enabled its rise. It kicked its robotics operations into high gear in 2012 with the company’s acquisition of industrial robot maker Kiva Robotics.
It didn’t stop there, also pouring resources into developing robotics software and AI-driven inventory management systems. Its advanced warehouse robots helped Amazon become the industry leader on two-day shipping, forming the backbone of its vaunted Prime membership program.
“When I started 12 years ago, it would take an operator one hour and a half to take 100 units from the shelves and put them to the packer station to be packed,” said Stefano Perego, Amazon vice president of North America and EU customer fulfillment. “Today, with the robot, we can do that in 20 minutes.”
"Most companies still cannot deliver Amazon's promise and very few are capable of getting to same-day, one-day, or two-day delivery,” said Citizens JMP Securities analyst Nick Jones. “It is a differentiator.”
Robotics improves safety risk in warehouses and enables regionalization, which allows Amazon to split the US into eight regions instead of a single network, said Perego.
Its fulfillment network, staffed by 750,000 robots, uses AI to optimize inventory management, making sure that each location has the items most likely to sell in that region. The practice reduces shipping costs, improves margins, and allows customers to get their favorite items in a flash.
Jones said that, while it’s difficult to quantify the growth that Amazon’s robotics investments have led to, as the company matures, it’ll rely on these efficiency savings to drive its net profit and prove its worth to investors.
Inside the warehouse
The company calls its Matteson, Ill., warehouse a “generation 11” fulfillment center. And it’s big — like the warehouse at the end of “Raiders of the Lost Ark” big.
The fulfillment center's former general manager, Lamonte Heyward, told Yahoo Finance that the facility has 63 miles of conveyance, amounting to about 35 to 40 football fields, and ships 600,000 units daily across the Midwest.
In this facility, Amazon rolls out its most advanced robots that are ready for prime time. Take Robin, a package-sorting robotic arm. Robin can identify the zip code of a package it picks up, and can tell when a package is ripped or torn, or if its address is unreadable.
In this age of automation, many people are concerned that robots will take their jobs, though some Amazon workers think there’s still a role for them. For example, Bianca Boyd walks among the robots as an “amnesty trainer,” helping correct the robots’ mistakes when items fall out of their pods.
“I have to go and pick the items up, so nothing else crashes or gets run over," said Boyd. "I feel like they need amnesty responders here to make the flow of the operation go quicker and smoother."
Amazon says its robots are crucial to preventing employee warehouse injuries, though there are new concerns for workers in this mechanized environment. The jobs of yesteryear allow humans to be mentally stimulated — navigating the maze of shelves and learning the layout of the warehouse — while today’s tasks can be more monotonous, though less physically taxing.
"I've talked to warehouse workers who say that they themselves feel like robots,” said Cornell University professor Alex Kowalski. “Now you're basically moving a couple of inches back and forth, and maybe standing up and down a little bit. That's your entire day."
Though Amazon’s investments in robotics is focused on efficiency, it will likely enable future cost savings. In September, the company announced a hiring spree of 250,000 workers to prepare for the holiday season, which includes a $1.3 billion investment in pay increases.
“I think also they're trying to reduce their dependence on blue-collar labor at the fulfillment center level,” said D.A. Davidson analyst Tom Forte. “Trying to address the cost of labor at the fulfillment center level by becoming more automated over time."
Amazon’s building its own future — and ours
These robots on the fulfillment center floor in Matteson, and across the country, all originated in the same place — Amazon Robotics in Boston.
The secretive facility started out as the Kiva Systems building, and became Amazon’s after the 2012 acquisition. Every single robot the company has ever built comes from this plain-looking warehouse. But anytime Amazon builds a new robot, it’s because it has a purpose in mind.
"We're not just building technology for technology's sake; we're really thinking about, what are the problems we want to solve in these fulfillment centers,” said Julie Mitchell, Amazon director of robotic sortation technology. “We’re working backward from there so that we can take our robotic architecture and sort of tune it to these applications."
Amazon declined to disclose how much it spends on its robotics operation to Yahoo Finance, and five analysts we polled couldn’t put a number on it either.
Forte said it’s likely embedded within capital expenditures and the “technology and content” section of its balance sheet. Last year, Amazon spent more than $42 billion on technology and content, according to SEC filings.
Though there is limited visibility on what it’s costing, Amazon robotics is plowing forward. Just last month, the company announced new humanoid robots to its lineup.
Amazon has built the invisible infrastructure of our lives, allowing consumers to order groceries one minute and a weather report from Alexa the next. As the web of Amazon expands, these robots are right at the center.
So, efficiency in the warehouses isn't merely functional; it's a map to the company's future. Through these robots, Amazon grew from a scrappy online bookstore to a trillion-dollar conglomerate. As it moves forward as a mature company, it will need to maintain its edge in robotics to fight off competition and impress Wall Street.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn.
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