Amazon To Acquire Automated Fulfillment Developer Kiva Systems for $775 Million

March 20, 2012 · Posted in M&E Daily, Today's M&E Connections 

Amazon’s planned $775 million acquisition of Kiva Systems — a developer of robots for the automated handling of inventory at distribution centers — shows that there is plenty of efficiency yet to be wrung from physical goods fulfillment.

“Amazon has long used automation in its fulfillment centers, and Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow,” says Dave Clark, Amazon’s vice president of global customer fulfillment, in a statement. Kiva’s robots already process orders at the fulfillment centers of Toys R Us, Staples, and other major retailers; Amazon-owned Quidsi also employs the Kiva technology for e-commerce sites such as Diapers.com.

Wall Street is responding positively to the acquisition agreement. “One of the knocks on Amazon is that their fulfillment is an expensive, manual process,” BGC Partners analyst Colin Gillis tells Bloomberg. “They’re not getting the benefits of scale. So they’re taking some steps towards it.”

Gillis adds that Amazon’s outright purchase of Kiva Systems, as opposed to licensing its automated fulfillment technology, “potentially removes the advantage for any competitor.”

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