Amazon is ramping up its latest generation of cutting-edge robots and the number of delivery centers across its vast fulfillment network as the online retailer pushes to boost e-commerce sales and cut costs and the time it takes to fill orders.
Seattle-based Amazon reported its fastest deliveries on record in 2024, with a more than 65% increase in the number of items delivered to Prime members in the United States on the same day or overnight in last year's fourth quarter compared with the same time the prior year.
The move by the world's biggest online retailer, and one of the largest users of commercial real estate, raises the stakes for competing goods sellers as chains such as Walmart work to also increase their delivery efficiency. The pressure is rising as retailers try to keep pace, with Amazon wanting to cut its customer waiting times even further: it's looking to deliver drugs and other consumer essentials in a little as an hour as it deploys robots, drone and other technology to fine-tune its logistics network.
The company rolled out a redesign of its U.S. inbound delivery processes to receive and prepare products at cross-dock warehouse facilities near ports and rail yards for distribution to the company’s fulfillment centers.
“We’re continuing to invest in capacity for our fulfillment and transportation network to support future growth,” CEO Andy Jassy told investors during a call on Thursday. “We’re also investing in same-day delivery facilities in our in-bound network, as well as robotics and automation. While still in its early stages, our inbound efforts have improved our placement of inventory so even more inventory is closer to end customers.”
Amazon’s growing fleet of robots that work in its fulfillment centers around the world could save the tech giant from $4.5 billion to $10 billion a year by 2030 if they can fulfill 30% to 40% of orders, according to a research report this week by Morgan Stanley. The robots perform almost every task a human is able to do, from picking, packing and sorting items to inventory management and storage, which make up about 60% of fulfillment costs.
Robot rollout
Amazon said it has developed six new warehouse robot models in the past three years that can now cover almost every stage of fulfillment.
“What we’ve seen recently is the next tranche of robotics initiatives have started hitting production” in such locations as the company’s new fulfillment center in Shreveport, Louisiana, Jassy told investors Thursday. “We’re very encouraged by what we see there.
He added that "it’s still relatively early days, but we now have plans to start expanding to a number of other facilities in the network, some of which will be [at] new facilities and others which will be retrofitted.”
Jassy said the company “is not close to the end of what we think is possible to use robotics to improve cost to serve and safety in our fulfillment.”
Amazon's fulfillment center that opened last fall in Shreveport has cut that type of processing cost by 25% during peak periods, according to the Morgan Stanley report.
The company is also still expanding its global warehouse footprint that totals more than 679.6 million square feet across roughly 2,672 facilities as of the current quarter, according to MWPVL International, a supply chain consulting firm that tracks Amazon distribution facilities.
Amazon plans another 62.6 million square feet across more than 200 of planned facilities worldwide, according to MWPVL. More than half of those are smaller package delivery centers located closer to customers, according to the data.
“We expect Amazon to continue to expand its warehouse network to support growth, while also upgrading the footprint toward next-gen robotics in new builds and retrofits,” according to Morgan Stanley. “The question of how quickly Amazon shifts volumes to robotics-enabled warehouses will likely come down to reasonable and improving paces of build/retrofit, with new robotics plants still taking one to two years."