Robots score a victory in the world of e-commerce.

Posted on | March 26, 2012 | No Comments

In the battle between man and machine, the robots just scored a victory in the world of e-commerce.

Amazon.com Inc. said Monday it is buying Kiva Systems Inc., which makes robots used in shipping centers. The $775 million acquisition comes as Amazon continues its heavy spending on fulfillment centers to help fuel its business.

Robots on the March

How Kiva’s robots run a warehouse

• To complete an order, Kiva’s squat orange robots fetch tall movable shelves, or pods, that have the items needed, bringing them to the human “picker.”
• A laser pointer tells the human which item needs to be picked from each shelf. The worker, who stays in one place, scans a bar code to confirm it is the right item. It’s placed in the order box, which sits on another one of the mobile pods.
• New pods arrive steadily with additional items as needed. Items are grouped together to fulfill the orders.
• Pods filled with completed orders are taken by the robots to the shipping door, where a human tapes them closed in preparation for final transport.

While the Seattle-based retailer has used some automation in its fulfillment centers in the past, it has depended heavily on people, hiring thousands during the holidays to cruise through football-field sized warehouses to pick items from shelves.

With Kiva, Amazon is now looking at a more automated approach. The robots are already used by two websites that Amazon has acquired: shoe-retailer Zappos.com and baby-products site Diapers.com. The robots bring the product shelves to a warehouse worker, rather than a worker walking to the shelves. The robots locate the items in a customer’s order, move the products around warehouses and help get packed boxes to a final loading dock.

The robots—squat, orange cubes—zip around shipping centers loaded with inventory shelves stacked several feet into the air above them. The robots can be tailored to each particular client, with customized software. “Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow,” said Dave Clark, Amazon’s vice president of global customer fulfillment.  A spokeswoman emphasized that Amazon won’t be eliminating any jobs as a result of the Kiva acquisition and will continue selling Kiva’s technology to other retailers.

Kiva’s robots are used by retailers like Staples and Diapers.com. Other firms providing robotic automation for warehouses include Adept Technology Inc. of Pleasanton, Calif., and Transbotics Inc. of Charlotte, N.C. Both companies were founded in the 1980s. Adept touts customers including Siemens and Hershey Foods.

Kiva pitches its robots—which can cost between a few million dollars to as much as roughly $20 million—as simplifying and reducing costs. Though assessing the costs and benefits of robots versus human labor can be difficult, Kiva boasts that a packer working with its robots can fulfill three to four times as many orders per hour.

Kiva is backed by Bain Capital Ventures and Meakem-Becker Venture Capital, among others. Amazon said Kiva will remain headquartered in North Reading, Mass.

The Kiva deal is expected to close in the second quarter.

Adapted from Wall Street Journal

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