Mark Argento, Analyst at Lake Street Capital Markets, says Wall Street allows Amazon.com, Inc. (AMZN) to play by a different set of rules than many other smaller competitors. One area that has been impacted as a result is automation, using robots and logistics to better serve customers.
“Three years ago Amazon bought a company called Kiva that had an automated warehouse robot that moved product around more efficiently related to order fulfillment, pick, packing and shipping,” Argento says. “They figured they needed to get ship costs to a small percentage of sales and become more efficient than anybody else, and the acquisition of Kiva was the best way to do it.”
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At the time of the acquisition, Kiva had been serving a lot of large customers like Costco and other large retailers. When Amazon bought the technology and brought it in-house, it became unavailable for new facilities of existing customers.
“Obviously whatever contracts they had were upheld, but the point in all this is it’s a cutthroat business to remain competitive,” Argento says. “It is always a challenge, and one that probably won’t go away.”
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