Tuesday, March 20, 2012

Why did Amazon buy Kiva?

I'm quite intrigued by the announcement that Amazon is acquiring Kiva Systems. Kiva makes bright orange robots that operate in distribution centers to fulfill orders. Why does Amazon want to vertically integrate in this way? Clearly, distribution is a key capability at Amazon. Thus, they may be acquiring key knowledge and competences. On the other hand, why lock yourself into this particular warehouse solution? Will Kiva truly be better off within Amazon as opposed to being independent, or part of a logistics firm? Moreover, how will other retailers react to the fact that they will be buying the robots from a direct competitor? The deal raises many questions. Stay tuned as we should hear much more about Amazon's rationale for the deal in the days ahead.

2 comments:

PJ Neal said...

My first thought wasn't that Amazon would be selling the robots to their competitors, but that Amazon was about to start running warehouses for other companies. They've built a ton of knowledge about logistics and best practices; it's a logical next step.

city said...

nice opinion.. thanks for sharing..