NEW YORK (CNN) — Amazon is burning through billions to get you stuff faster. It'll spend more than $35 billion on shipping costs this year, more than twice what it spent two years ago.
The company recently warned investors it'll drop an extra $1.5 billion this holiday season as it works to transition to one-day shipping for Prime members. Profits are shrinking. And yet, this may prove to be a modest undertaking compared to Amazon's future delivery ambitions.
"When we have a full drone fleet you'll be able to order anything and get it in 30 minutes if you live near a hub that's serviced by drones," Amazon CEO of Worldwide Consumer Jeff Wilke told CNN Business. "That's only possible because of robotics."
Amazon has built out a network of costly fulfillment centers across the US and the world. Inside lies a critical advantage, robots that have made the buildings faster and more cost-efficient. They may well pave the way for a new era of same-hour deliveries.
It all started with an acquisition Amazon made years ago that doesn't even rank among its five biggest deals by dollar value. In 2012, Amazon bought the robot startup Kiva Systems for $775 million. Today it has a fleet of 200,000 Kiva robots supercharging its fulfillment centers, alongside the more than 500,000 employees it's hired since the acquisition.
To continue to speed delivery times and stay ahead of competitors, Amazon will need even more robots. Amazon is testing robots that carry packages on sidewalks. It's invested in self-driving vehicles.
Amazon's robot push could trigger more successes, but also exposes it to harder challenges than operating in environments it controls, like fulfillment centers.
CNN Business spoke with current and former Amazon executives as well as robotics experts to explore how one robot has already transformed Amazon, and how the next generation of robots may forever change Amazon once again.
Amazon first dabbles in robots
Nothing seemed impressive about Amazon's first robot.
It didn't walk like C-3PO or talk like Rosie the Robot. It didn't even have arms, legs or a face. Its stubby frame was only good for sliding under a bookshelf and moving it.
"A homemade microwave on wheels," was how one potential customer described it to Jason Reneau, an early employee at Kiva Systems, which invented the robot in 2002.
The startup was so desperate for business it offered full refunds to entice customers.
"There's no way that works," recalled Nick Swinmurn, founder of Amazon subsidiary Zappos, of the first time he saw a Kiva robot.
Industrial robots weren't new when Amazon first experimented with Kiva robots. For decades, automakers had used giant robotic arms to help assemble cars. Manufacturing plants relied on primitive robots to move materials on fixed routes.
However, Kiva Systems was the only company trying to use mobile robots to speed up ecommerce warehouses. It figured out how a flock of free-ranging robots could safely bring bookshelves to stations manned by humans, who would pick merchandise from the shelves to complete an order. Then the robots return the shelf to a resting spot, sliding around hundreds of nearby robots. Barcode stickers on the floor help the robots know their location and avoid collisions.
Before the Kiva robot, e-commerce employees in warehouses had to walk up and down long aisles, to retrieve goods from shelves.
"You see all these articles about people having to walk 15 miles a day," said Dave Glick, a former Amazon executive who helped integrate the Kiva robots. "You're spending capital to make humans more efficient. Now they're picking more things and standing in one place, so it's not as physically grueling." (Amazon has been criticized over the years for difficult working conditions and injuries in its fulfillment centers.)
Amazon bought Kiva Systems in March 2012, kicking off a whirlwind. Kiva's senior engineers flew to Seattle and holed up in a conference room for a week with Amazon leaders. Glick's team prioritized building a proof of concept with Kiva's technology. By early 2013, Amazon was shipping some packages with the help of Kiva robots out of a facility south of Seattle, according to Glick.
Before the end of 2014, Amazon fulfillment centers were home to 15,000 Kiva robots.
Amazon has redesigned the robot four times since buying Kiva, according to Tye Brady, the chief technologist at Amazon Robotics. Seemingly small changes -- the latest robot is several inches shorter -- have allowed Amazon to make its bookshelves bigger. More goods are packed in existing warehouses, saving millions on new warehouse costs.
"That was quite a slam dunk," said Rian Whitton, a robotics analyst at ABI Research. "They scaled it very impressively and in a short period of time."
Robots shift from factory floors to the skies
Today Amazon's robot ambitions extend far beyond its fulfillment centers. These new teams operate independently of the initial Kiva Systems group. Amazon doesn't say how many employees work on robotics, only that they're among the tens of thousands working on artificial intelligence.
Amazon is testing four-wheeled delivery robots that roll on sidewalks. Earlier this month, Amazon announced plans for a new facility outside Boston to design and build robots. It's invested in a self-driving car startup, and Amazon goods have been seen being hauled by a self-driving truck. Amazon has spent more than six years developing drones, which may one day drop packages in backyards assuming regulators allow it.
This July, Amazon held its first-ever "Botapalooza," an internal conference that brought together robotics employees from across the company. Amazon wants to encourage collaboration among its robotics teams, which can use the help.
"We're still encountering things that we didn't really consider would be on sidewalks — parked cars, kids' bicycles," said Sean Scott, who leads the Amazon Scout program that delivers packages with sidewalk robots. It's testing in Snohomish, Washington, and Irvine, California.
Sometimes garbage cans or recycling bins block the robots. Stray cats have stalked them. Amazon had to halt its Washington tests in February and March following heavy snowfall.
"We're at the early days of all of this," Scott said. "We're just getting started in terms of the capabilities of what we can unlock."
While sidewalks are tough for robots to master, flying above it all isn't necessarily easier.
Amazon's drone will have to avoid telephone wires draped across backyards and streets. They'll have to dodge tree branches, birds and dogs patrolling backyards. Amazon has built a way for the drone to automatically find a safe landing place in case of an emergency landing.
"We'll fly as soon as we're safe, not any moment sooner," said Gur Kimchi, who leads Amazon's drone efforts.
More robots, more problems
Amazon risks a public backlash if something goes wrong with its newer robots. And unlike with Kiva, there's competition. Major companies such as Alphabet, FedEx and UPS are all investing in drone delivery.
Amazon will also have to face questions about the impact of robots on jobs. Amazon's dive into robotics has coincided with hundreds of thousands of new hires. Amazon entered 2012 — the year it bought Kiva — with fewer employees than Microsoft and Apple, and roughly as many as Google. Now it has more employees than Microsoft, Apple, Google and Facebook combined. Amazon is the only one to have deployed robots at scale, putting it right at the center over the debate — and fears — over automation. The concern is that, while it's adding workers today, it will be eager to offload them, especially the least skilled and vulnerable ones, once the robots are ready.
"I do worry sometimes when people equate [artificial intelligence] and robotics with job loss," Wilke said. "If you look at these kinds of technological innovations over the years it tends to be the case they don't eliminate jobs, they tend to change jobs and change work. This is true for us."
A study from the consulting group McKinsey has cautioned that as many as 375 million workers will need to change their occupational category by 2030 due to automation.
Some robotics analysts CNN Business spoke with predicted that Amazon would try to add robotics and automation to its entire operation. They described it as inevitable given Amazon's focus on efficiency and pleasing customers.
Pete Wurman, who co-founded Kiva and has since left Amazon, said that during his tenure he encouraged the company to fund its "picking challenge," a now defunct competition for academics and small companies to automate the process of removing goods from shelves. Eventually, he expects some of the picking process to be automated.
But Wurman cautions that what's easy for humans — like identifying and taking handmade jewelry in a clear bag off a shelf — has proven incredibly tough for machines. He said he's optimistic on the long-term societal implications of automation.
"We're really good at seeing how they'll take away the jobs we know about," Wurman said. "But we're really bad about seeing the jobs that will be created."
The-CNN-Wire™ & © 2018 Cable News Network, Inc., a Time Warner Company. All rights reserved.