Is the Future of eCommerce Riding on Robots?


Recently, Amazon announced that they were acquiring Kiva Systems for US$540MM, the Massachusetts based company founded by Mick Mountz in 2003.

Mountz, an engineer with a strong background in the low margin grocery fulfillment business, realized that the MHE intensive environment that was typical of the day was not sustainable for eCommerce applications. The industry needed less fixed equipment, a dynamic way of storing product and a flexibility that traditional material handling installations could not provide.

Enter Kiva Systems, with an innovative approach that uses tortoise sized robots to move product modules around the warehouse for restocking, order picking and forwarding to shipping.

Boasting a 2-3 times productivity improvement against traditional order picking, coupled with a dynamic re-assignment of product location based on demand, the robotics based system eliminates the need for product slotting cycles, and ensures that faster moving product is placed closer to the pick stations to reduce transit time.

In addition, Kiva Systems integrates with the client’s inventory management software to ease transition.

“The principals of Quidsi (Diapers.com) say the importance of logistics in Web commerce can't be overstated. They saw their opening after realizing most e-tailers focus on driving people to the website, not on back-end operations. Quidsi and Kiva became so good at distribution that even Amazon, known for its logistical prowess, bought the company rather than compete with it.” reports Bloomberg Business Week.

For those that don’t want to invest the $1-4M for a system, Kiva is reportedly exploring leasing options to provide access to the product to a wider range of clients.

With the eCommerce markets approaching US$200 Billion per year, innovations that revolutionize material handling and storage are more likely than incremental improvements on existing methods.

A demo video of the Kiva system can be viewed below:

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