In the Yahoo Finance series NEXT, Yahoo Finance anchor Allie Garfinkle travels to Matteson, Illinois, and Boston, Massachusetts, for an exclusive look at the future of Amazon's warehouses, where the e-commerce giant is building and deploying its next generation robots.
Amazon’s robotics have become the center of the company’s strategy to fulfill the pledge it makes to you, me, and anyone with a Prime membership — lightning fast delivery. These robots are mission-critical — the company is betting they will be the edge they need to corner online retail and improve margins.
Amazon (AMZN) today operates at a scale that was unthinkable in the 1990s, when Jeff Bezos was mailing out books from his garage. Take Prime Day. Ten years ago, Prime Day didn’t exist. In 2023, the virtual shopping event generated billions in sales within 48 hours.
The company is now the blueprint for every digital marketplace we use, and the phrase the "Amazon Effect" has come to embody a tangible infrastructure change in our world — that brick-and-mortar retail locations are fizzling away as consumers flock to the Internet.
Ultimately, in developing these robots, Amazon is building its own technological and financial future. Amazon is a company that thrives on being the invisible infrastructure of our lives, and the robots are the invisible backbone of Amazon.
NEXT is a groundbreaking series that will offer a glimpse into some of the biggest companies Yahoo Finance covers every day, what they’re planning for the future, and what it means for your investing portfolio.
For more on our NEXT Series, click here, and tune in to Yahoo Finance every Monday at 10 a.m. ET.
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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Video Transcript
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ALLIE GARFINKLE: Amazon's robotic future is unfolding inside a top secret warehouse facility code-named Boss 33. The robots in development here could one day solve some of the biggest challenges facing e-commerce by driving efficiencies and improving safety. While many of its competitors are investing in robotics-based fulfillment centers, Amazon, with its army of 750,000, is designing, building, and deploying its own robot workforce, driving profits and market share for Amazon more than its human-dependent rivals.
I'm Allie Garfinkle. And this is what's next for Amazon.
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We are standing outside this unmarked building that hosts some of the most advanced autonomous robots in the world. It's so secret that if you were driving by, you would really have no idea. And most people who work at Amazon don't even know where this place is.
If you're investing in Amazon, robots are what Amazon's investing in according to industry analysts and company representatives. Analysts say that Amazon's goal is to substantially boost margins in its most consumer-facing business-- retail. And here at the simulated distribution center, robots are learning how to work alongside humans.
This is Proteus, Amazon's first fully autonomous warehouse robot. It may look like a Roomba, but Proteus signals where the robotics revolution is headed-- towards robots that are increasingly self-sufficient.
Proteus has eight different sensors, five different cameras. And they're for navigation. The primary LiDAR sensor for Proteus is right here. See, it's actually giving me the red light. Its eyes are getting bigger because I got closer. It stopped. And the most special thing about Proteus is that it's autonomous. This is a robot that can move around completely on its own.
Unlike most warehouse robots, Proteus is designed to interact with people. Proteus's sensors can distinguish between humans and other robots. And its eyes are programmed to be expressive. The goal-- for human workers to feel safe with robots and to be able to understand the robot's needs so that you can work together effectively.
TOM FORTE: What they're trying to do, in my opinion, is lean into automation over time to potentially increase the efficiency of their large fulfillment center network, enabling them to get more products to consumers on a one- or two-day basis in as cost-efficient manner as possible.
ALLIE GARFINKLE: For Amazon, the financial stakes are high. Consider this, during the pandemic, Amazon hired 327,300 people over the course of 2020. By the end of the year, more than 1 million people were working for Amazon. But about two years later, under macroeconomic pressures like inflation and rising interest rates, the company began cutting its workforce, laying off 27,000 corporate employees over several months.
And investors felt the strain. Over the course of 2022, Amazon lost nearly half its value in what was the stock's second worst year ever. Over time, Amazon's increasingly robotic workforce could smooth out booms and busts for both Amazon and its shareholders.
It's a long-term investment that began more than a decade ago and still hasn't reached its full potential. While founder Jeff Bezos was personally investing in robotics companies as early as 2008--
JEFF BEZOS: Why am I feeling so much like Sigourney Weaver?
ALLIE GARFINKLE: --Amazon made its first big move in 2012, acquiring industrial robot maker Kiva Systems for $775 million. Today, that facility is known as Amazon Robotics.
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The robots that you see here are still in development. With these models, Amazon says it's working to solve two of the biggest problems in robotics-- manipulation and gripping.
One of the most advanced is the AI-driven Cardinal, a towering robotic arm that can identify packages and lift up to 50 pounds. Cardinal will one day operate inside Amazon's shipping docks, the final stop for billions of packages a year. More boxes, out the door faster, potentially leading to increased profits.
JULIE MITCHELL: For the first time, this robot will be almost playing Tetris with the packages. So we get a super dense shipping container that's going to make our trailers more efficient and actually increase speed to our customers.
ALLIE GARFINKLE: Though Amazon has been very open about its commitment to robotics, the company declined to disclose how much it annually spends developing and deploying robots. And analysts Yahoo Finance spoke with also couldn't put a price tag on it. Company watchers suggest that Amazon's Robotics investment is hidden away in financial statements under categories like CapEx or technology and content, which Amazon spent over $40 billion on last year.
Here's what we do know. Amazon is the place where you buy pillows and coffee filters that are delivered increasingly with the help of robots to you in two days or less. It's where you watch original shows, movies, and live sports. It's cloud computing and whole foods, medical appointments, and gaming on Twitch.
The market values Amazon at $1.3 trillion. And in 2022, the company generated $514 billion in revenue. When it comes to US online shopping, they're the leaders by a huge margin. Amazon has a grip on 37% of the e-commerce marketplace. Walmart, their closest competitor, comes in at 6.3%.
We're in Madison Illinois at one of the largest Amazon warehouses in Chicago. It's also the site of some of the most advanced robotics in the world.
The robots here are tied directly to Amazon's bottom line today and to its future as the company looks to make deliveries faster and cheaper. Over the past 10 years, Amazon has completely upended the shopping experience for consumers in what is now called the Amazon effect.
NICK JONES: Most companies still cannot deliver Amazon's promise. Very few are capable of getting same-day, one-day, two-day delivery. It is a differentiator. You see most e-commerce companies now, instead of really trying to compete, they're just trying to give transparency.
ALLIE GARFINKLE: I put the issue of delivery time and robotics to the head of Amazon's fulfillment centers, Stefano Perego.
Is two-day delivery possible at scale, is one-day delivery possible at scale without robotics and AI?
STEFANO PEREGO: I think it would be very difficult to do faster deliveries like a regionalization process without leveraging AI for optimized placement. So on large-scale network, it's very important to leverage technology, whether it is robotics or AI to make sure that we serve the customer with lower cost and faster.
ALLIE GARFINKLE: Consumers want speed. Wall Street wants efficiency.
STEFANO PEREGO: Robotics is playing a vital part to our strategies. Robots and AI are critical to the process because you take away cost to serve by leveraging robots. And you are taking away time by making it faster deliveries to customers by leveraging global. In that sense, AI and robotics help us to make our own future.
NICK JONES: If you want to drive margins higher, you need to keep costs down. And the robots can effectively work 24/7. They're relatively fixed cost. But if you can do more volume using robots, they can drive more revenue on the same cost that would generate more profits.
ALLIE GARFINKLE: According to the American Staffing Association, 74% of Americans believe increased automation will take jobs away from humans. In February of 2023, ARK Invest CEO Cathie Wood, a longtime Amazon shareholder, said that by the year 2030, the company could have more robots than employees.
Amazon says more robots in its warehouses won't take jobs, that it will create them as more and more people will be needed to work with and repair the technology. The changes that Amazon Robotics promises are still in the making as Amazon works to stay ahead of the competition with faster delivery times. But customers and investors will ultimately be the ones to decide if Amazon's Robotics' bet has paid off.
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