Amazon.com Inc. (AMZN - Free Report) is definitely one of the most customer-focused companies and therefore, it is determined to automate its warehouses, improve delivery system and offer better services to clients.
Reportedly, Amazon signed a seven-year commercial deal with the French warehouse robotics firm Balyo.
Per the deal, Balyo will supply the retail giant with self-driving forklift trucks. In return for purchasing Balyo products, Amazon will receive free stock warrants constituting up to 29% of Balyo's capital, depending upon its purchase of Balyo-enabled products.
Balyo, whose navigation system turns forklifts into self-driving vehicles, is a technological leader in designing robotic solutions. The company expects 2018 revenues to come in at 23.3 million euros, up 40% from a year ago.
Robotics Expansion Continues
The world's largest online retailer has been striving to expand and automate its fulfillment centers around the world. These innovative technologies shorten the time taken to sort and pack products, thereby strengthening same-day or overnight delivery services.
Amazon’s acquisition of Kiva Systems in 2012 was perhaps a more transformative step toward warehouse automation. The deal gave Amazon an army of robots that could zip through its warehouses, scan inventory, segregate stuff and fulfill shipping requests at rocket speed.
Since this buyout, Amazon has entered into corporate and academic partnerships to support innovation throughout its robotics systems. It now has robots at its fulfillment centers across the world, which is increasingly taking over its shipping activities. Needless to say, Amazon depends a lot on robots for ensuring on-time delivery, customer convenience and saving on costs.
The latest investment in Balyo is in line with the company’s strategy to automate its warehouses in order to cut costs and speed up deliveries.
Amazon is gaining further momentum in the online retail space with the help of its robust delivery system. Moreover, distribution strength, expanding seller base and product offerings are aiding its dominant position in this particular space.
The rapid expansion of Amazon’s one-day, same-day and two-hour delivery services has been instrumental in its success. Moreover, the company’s strengthening grocery services via Whole Foods Store is a major positive.
The online e-commerce giant’s increased focus on automating its distribution centers is clearly heating up and its recent investment in robotics companies should continue to pay off. There is no doubt that Amazon’s efforts have made other retailers think on similar lines to stay abreast in the race. Retail giants like Target Corporation (TGT - Free Report) and Lowe’s Companies, Inc. (LOW - Free Report) have also been giving their robots a trial run to track inventory at their stores for a while now.
Per a research report, the logistics automation market is projected to grow from $46.22 billion in 2018 to $80.64 billion by 2023, at a CAGR of 11.8%. The growth of the market can be attributed to the exponential growth of the e-commerce industry, advancements in robotics and the emergence of IoT.
Therefore, an increasing number of retailers are testing robots and the idea is to not only manage store inventory more efficiently but also check if they come at a price cheaper than human labor.
Zacks Rank & A Stock to Consider
Amazon currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the broader technology sector is Groupon, Inc. (GRPN - Free Report) , which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Groupon is currently pegged at 3%.
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