Episode 2 on Amazon’s Unstoppable Innovation
In Episode 1 on Amazon’s Unstoppable Innovation, we checked on the innovation strategy for Amazon that led its growth from the very first beginning. Today, we’re going to see how Amazon currently works for its innovation and development. In fact, Amazon’s logistic innovation is well-reputed as it is illustrated by the25,500m2 ‘Quiet Logistics’ warehouse, among others, which is automatically run by 10,000 to 20,000 robots. As may be checked in the video available through the link below, the robot system, designed by KIVA Systems, can locate where specific items are and get them out of the racks. The robots register an accuracy rate of up to 99.99%. It means that marginal cost is almost zero.
Innovation 1. Blue Origin Project
Blue Origin is a privately-funded space project, separately handled by Jeff Bezos, the CEO of Amazon. Now worth 34 billion dollars and ranked as the eighteenth richest person in the world, Bezos dreams of venturing out of the planet into the outer space. His is a different project than is pursued by Elon Musk, the CEO of Tesla Motors. He means to aggressively engage in privately-funded space development, independently of government-management projects as with NASA.
For the last decade, Blue Origin has endeavored to fulfill its dream by launching a variety of experimental rockets. Blue Origin signed with United Launch Alliance, a joint venture of Boeing and Lockheed Martin, to develop a rocket engine. The company also disclosed its plan to start testing an engine in 2016 and launch a real rocket no later than 2019.
Innovation 2. Amazon Drive-Through
‘Fast delivery’ has become the symbol of Amazon.com and served as the most critical part of the foundation for the company’s growth. With its catchphrase of ‘zero delivery time’, Amazon.com has tried various methods to get products to consumers within the shortest possible period of time. And one of these is Drive-Through, which is about allowing a customer to remain in the vehicle while receiving pre-ordered grocery items from an offline store. This is quite similar to the practice at fast food restaurants like McDonald’s, where customers order and receive food while sitting tight in the vehicle.
This way, consumers can enjoy the convenience of pre-ordering products online and then visiting an offline store to get the items while remaining in the car. Amazon is reportedly pushing forward with a plan to implement a drive-through service at a 1,022m2 building located in Silicon Valley, California. Amazon.com has installed Amazon Locker at convenience stores in some parts of the US where the company provides the service by which customers can pick up their package.
Innovation 3. IoT meets logistics automation ― Amazon Dash
In March, Amazon launched Dash Button which allows customers to order products with one click. The thumb-sized device is to be placed close to a home product that a customer frequently uses, and when one runs out of its supply, one just presses the button to order an additional supply. Dash Button is said to have incorporated IoT technology and automation systems that Amazon currently owns. Each device has a product brand printed on it and is to be placed in different locations of the house such as kitchen, bathroom, laundry and storage, and vestibule. The device can be set and controlled with a smart phone, and provided one has selected items and quantities, one can place an order through wireless Internet by just pressing the button. Dash that came out last year processed orders through voice commands, while this year’s version has simplified the whole thing into single button activation.
Not only ideas but also efforts to realize them are recognized. This is because to create one dash button requires the huge task of integrating all different ordering systems for different companies into one unified ordering system and forecasting demand through big data analysis. Its further strength is that it provides users with a simple device. As the idea was innovative and it was disclosed on April Fools’ Day, a lot of incoming phone calls were asking, “Was the product really for sale?”
Innovation 4. Distribution strategy ruling out traffic jam ― Amazon drone
Amazon.com, the American e-commerce website, is planning to realize ‘drone delivery’. Amazon is now adding concrete technology to the drone delivery method, which was unveiled in 2013 in the name of ‘Prime Air’. On May 8, the UK edition of Wired reported that Amazon obtained a patent for Prime Air delivery technology which uses drones. The patent is for “aerial delivery of items”. Of course, some things have yet to be solved. To fly an unmanned flying object like a drone, you must get approval from the Federal Aviation Administration (FAA). For this, Amazon is currently involved in testing drone delivery in specified regions including Canada.
Amazon aims to make sure that its drone-based delivery technology will enable a user to receive an ordered product within 30 minutes. The kernel of Amazon’s patent for its drone delivery is as follows. Drone delivery can realize delivery of an item to a customer’s current location instead of his or her provided address (the customer’s current location is identified through hand-held devices like smart phone). Differently-sized drones are to be used for differently-sized items to be delivered. And drones fly while making sure to avoid humans or animals (meaning that their paths may be modified according to the presence of humans and/or animals, roads, or walkways). A drone can use various sensors including camera and infrared to search a delivery path and identify a landing spot.
Future of Amazon: 3D printer or something else
CNET, the US-based tech media website, disclosed “top 5 products we wish Amazon would make”. Amazon is reportedly working on some of the ideas. For example, the company is mulling over various innovative delivery methods such as having a 3D printer loaded on a delivery truck manufacture an item close to a customer’s location and deliver it, and shipping in advance an item which big data has figured out as what a customer would want. For more information, please check the video below.
So far, we have briefly surveyed innovations with Amazon in two separate episodes. Amazon.com could have chosen to remain an online bookstore, but instead, the company has been reborn as the most innovative online content provider through continued logistic and/or technological innovation. Now that it has surpassed the time-honored competitors in the logistics industry where new technologies or innovations are adopted more slowly than they are in the other industries, we are all on tiptoe to see where Amazon goes from here.