In 2012 when Amazon.com purchased Kiva Systems, a manufacturer of robots used in distribution centers, it was clear the company intended to use the technology to increase efficiency and reduce costs.
At the company's recent annual shareholders meeting, CEO Jeff Bezos said Amazon would deploy 10,000 robots in its distribution centers by the end of the year, up from 1,382 it had working in three warehouses in the middle of 2013.
Shawn Milne of Janney Capital Markets, via The (Philadelphia) Inquirer, estimates Amazon will save up to $900 million a year with the robots it is adding this year. In human terms, the company will be able to lay off or avoid hiring roughly 25,000 workers making $14 and hour plus benefits. Robots typically can be run for 20 percent to 40 percent less than the cost of human labor for the same job.
Robots cost about $25,000 per and an entire warehouse filled with them will run the total price tag up anywhere between $1 million and $25 million, depending on the facility.
One obstacle to Amazon more quickly rolling out robots, according to Mr. Milne, is the design of its existing facilities, which were built for humans. The company is now building distribution centers with robots in mind.
How important will automated warehouses become to the competitive positions of retailers in the next 10 years?