Last week, I got a behind-the-scenes look at one of Amazon’s new AI-powered warehouses, in what felt like a glimpse into the future.
Inside the 3.5m square foot facility in Nashville, Tennessee, Amazon was finally unveiling the fruits of its AI strategy, revealing a fleet of new AI-powered robots and tools designed to increase efficiency and, according to the company, improve the customer experience.
The robots scuttling around the warehouse have been given names inspired by birds, like the robotic arm ‘Sparrow,’ which picks up items and prepares them for shipping, and ‘Robin’, another robotic arm that sort packages with surgical precision.
There are also those named after mythical characters such as ‘Pegasus,’ a floor-bound robot zipping across a very American-like grid formation to ensure products get to the right place.
Another – my personal favourite – was the new and fully autonomous robot ‘Proteus,’ a hoover-esque machine that can navigate around humans while carrying heavy loads.
Proteus (Image: Amazon)
Proteus is designed to be “lovable,” with its friendly eyes adding a touch of humanity, according to Julie Mitchell, director of robotic sortation technology at Amazon Robotics. Much like a human colleague, it is not afraid to give you a side-eye every now and then and will politely signal if you get in its way.
Amazon claims its investment in these new toys and other AI solutions will drive greater efficiency across its operations. Drivers, for instance, no longer need to manually check addresses or organise packages; projectors help them identify the right parcels, shaving over 30 minutes off each route.
“When we speed up deliveries, customers shop more,” said Doug Herrington, Amazon’s chief executive of Worldwide Amazon Stores.
The American tech giant has also introduced AI ‘shopping guides’, while over 500,000 sellers are using its AI-driven listing tools to improve their businesses and shift more products. Robots reduce packaging waste and the company completely removed plastic air pillows from boxes this month.
When we speed up deliveries, customers shop more.
The goal is clear: faster, cheaper, better. Amazon has already surpassed pre-pandemic delivery speeds and aims to have the fastest Prime delivery times in the world by 2024. Last year, its innovations helped reduce costs by 45 cents per unit, marking the first cost reduction since 2018.
Although some analysts have complained that Amazon has largely left investors in the dark over AI, the scale of its AI investments is undeniable. Herrington said it is “hard to overstate” the impact of the technology on Amazon’s business.
Who will AI help?
Yet, for all the shiny new robots and AI hype, the question remains: will these technologies truly help?
For customers, the answer is likely a yes. Faster deliveries, more personalised shopping experiences, and a more sustainable approach to packaging.
The answer is also looking like a yes for Amazon itself.
Speaking to City AM, an investment analyst at AJ Bell, Dan Coatsworth, said that Amazon is not unique in the way it’s using AI in its Amazon Web Services (AWS) cloud business or to enhance its own operations, “but it is arguably more advanced in both areas than many peers”.
The e-commerce company, which has gained around $400bn (£306bn) in market value this year, is set to report third-quarter earnings alongside a host of megacap tech names next week and Wall Street analysts are bullish.
They have forecast Amazon to book revenue of $157.2bn (£120.2bn) for the three months ended in September, a nearly 10 per cent gain from the prior year. Earnings per share of $0.94 (£0.72) in the third quarter of 2023 is expected to rise to $1.14 (£0.87) this quarter.
AWS sales, Amazon’s biggest cash cow, are expected to grow by around 19 per cent. Coatsworth added that cloud growth has been a key driver of Amazon’s earnings and its success has allowed Amazon to “take risks, to try new ideas and to constantly fine-tune its operations without having to worry too much about how they will be funded.”
It could be a while before investors see any big returns from its new robots and AI innovations, however. “Like everything it does, Amazon’s latest upgrades are all about incremental improvements, which means the boost to earnings might be slow and steady rather than an immediate jump,” Coatsworth explained.
How will jobs be affected?
An employee inside an Amazon warehouse (Image: Amazon)
But while robots are accelerating delivery speeds and hoisting up Amazon’s bottom line, not everyone is thrilled. For workers, the reality of an increasingly automated Amazon is less auspicious.
Stuart Richards, a senior organiser at GMB Union, told City AM that the company’s introduction of more robots is something workers are “acutely aware of”.
He said: “What we’ve seen as a union is that folks don’t necessarily see this as something that is beneficial to them.
“One of the consistent themes we get back is that they feel that Amazon management looks at the robots and treats them more beneficially,” Richards continued. “They make sure that the environment is sufficient so it doesn’t damage the operation of robots, whereas the workers don’t feel that those considerations are extended to them.”
Still, as I wandered through the massive warehouse, I couldn’t shake the feeling that while these robots will certainly make life easier for some, they might make things even more monotonous for others.
‘You can’t unionise robots’
The GMB Union has long criticised Amazon’s working conditions and the company has faced union issues in the US too. There are concerns that robots may be part of the company’s solution to dodge workforce complaints.
Amazon, for its part, insists no jobs will be lost due to automation. In fact, it argues, more jobs will be created as new roles emerge to manage and maintain these robotic colleagues.
But when I questioned Richards about this claim, he was sceptical. Amazon went through a programme of site closures last year, he said, and built one new more heavily automated warehouse just outside Birmingham. “We believe there’s been a reduction in the number of roles. How many that is, we’re not confident saying,” he added.
A 2023 Massachusetts Institute of Technology (MIT) study, done in partnership with Amazon, shows that countries with strong social safety nets, such as Germany and France, tend to view automation more positively. Meanwhile those with smaller welfare programmes, like the US and the UK, are more sceptical about its impact on job security.
As one inside source drily put it: “You can’t unionise robots.” They told City AM that some workers had complained the robots were actually pushing them into even more repetitive roles with little room for mobility.
As advances in AI reshape the retail giant, it’s not just packages that are being sorted. Amazon’s entire workforce could be, too.