Amazon continues aggressive warehouse robotics strategy

The Robot Report

Private equity giant Blackstone Group recently acquired Colony Capital for $5.9 billion, a deal that encompasses 60 million square feet of warehouse space across 465 facilities. Blackstone reportedly now manages more than $250 billion worth of property worldwide. This latest portfolio of fulfillment centers puts Blackstone in control of more than 440 million square feet of distribution centers.

Logistics competitor Prologis recently purchased Liberty Property Trust for $12.6 billion, enabling it to now manage more than 570 million square feet of industrial space. In explaining the aggressive move, Blackstone President Jonathan Gray said, “We’ve been the big buyer of warehouses around the world, probably bought $70 billion, on the simple premise that goods are moving from physical retail to online retail.”

Probably the best, and most ironic, realization of Gray’s strategy is the recent moves by Amazon to convert closed shopping malls into fulfillment centers. As more stagnant real estate is transformed into bustling e-commerce hubs, hiring skilled labor is becoming increasingly more challenging. In the words of labor management executive Peter Schnorbach, “It used to be that every month businesses would get rid of their bottom 10% and replace them with new people. That doesn’t work anymore because you can’t replace them.”

Ever since its buyout of Kiva Systems, Amazon has been actively adding robots to its workforce. Today, Amazon employs more than 100,000 robots at 175 distribution centers nationwide. According to labor statistics, the retailer’s seasonal staff in 2016 and 2017 was 120,000 and 150,000 workers, respectively. That number dropped to around 100,000 in 2018, and many predict it could decline further in 2019 despite this year’s holiday online spending estimated to soar to over $140 billion (up 14%).

Amazon

Amazon has also invested significant dollars into incubating exclusive robotics systems. The company announced a $40 million investment for a 350,000-square-foot “robotics innovation hub” in Westborough, Massachusetts. Tye Brady, Amazon Robotics’ Chief Technologist, said the structure will consolidate all its automation labs and manufacturing floors into one destination to “design, build, program, and ship our robots, all under the same roof.”

For years, the e-tailer hosted “picking challenges” that invited roboticists from around the globe to compete in solving the company’s hardest fulfillment problems. Last year, the annual event mysteriously disappeared and reappeared as an online platform for submitting grant proposals of scientific research, which enables Amazon a first look at academic breakthrough.

In the world of corporate innovation, there is theater and then there is hands-on development. In the former, the innovation department is typically housed in a beautiful showroom full of the latest gadgets. Unfortunately, there are too many corporate actors eagerly playing the role of technology scouts purely for publicity.

Amazon operates in opposition of these stage productions. Amazon best illustrated this with the launch of its $100 million Alexa Fund in 2015 to accelerate the ecosystem for its Echo speaker. While Apple’s voice application, Siri, was released in 2011 in millions of iPhones, Alexa quickly became the de-facto home voice assistant with over 100,000 million units shipped with 70,000 voice-enabled skills. Today more than 150 products have Alexa built in and more than 28,000 smart home devices work with Alexa made by 4,500 manufacturers.

The key to this strategy was recognizing the impact of the development community and their fresh perspective to innovate in new creative ways beyond the original design. As a further testament to its success, the Alexa fund has grown to $200 million to expand its “Alexa Everywhere” goal.

As Amazon aims to fill the Westborough property with the latest robot advancements, a similar fund model could be adopted to outpace Walmart, Walgreens and other retailers that have recently upped their innovation game. In June, Walmart hired Scott Eckert, formerly of Rethink Robotics, to run its “Next Generation Retail” division out of its New Jersey incubator Store No. 8 and Walgreens last January teamed up with Microsoft.

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Source: therobotreport

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