Amazon’s Secret Weapon Could Save Their Warehouses $2.5 Billion
Has the future of robots arrived?
All eyes are on Amazon -- or rather, how much Amazon credit magically showed up in your account -- with this week's news about the $400 Million Amazon-Apple E-Book class action lawsuit. But there's even more brewing behind the scenes at Amazon. And its numbers are huuuuuge.
Amazon is now using Kiva robots, a company it acquired four years ago for $775 million, to fulfill orders in 13 of its warehouses. The Internet's largest retailer started outfitting fulfillment centers with the little orange robots for the 2014 holiday season. Now, the enormous efficiencies of the technology are becoming more apparent, Quartz reports.
The robots can handle the same job as humans in 1/4 the time. It takes a Kiva robot 15 minutes to find, pick and package an order, while it takes humans an average of 60-75 minutes. Warehouses with Kiva robots can also hold up to 50% more inventory because the little guys take up less space. Lastly, Kiva robots can hold up to 750 pounds, so they can haul more stuff than people.
As a result of these efficiencies, Quartz reports that Amazon has slashed operating costs at each warehouse by $22 million, or 22%. If Kiva robots did the same work across all 110 of Amazon's fulfillment centers, that would add up to a savings of $2.5 billion. It's almost important to take into account the cost of installation. Outfitting a warehouse with Kiva robots runs $15-$20 million. So the final cost-saving balance is closer to $800 million. Still, a nice chunk of change.