right_division Green SCM Distribution
Bookmark us
SCDigest Logo

Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

- March. 31, 2014 -

Supply Chain News: Amazon will not Make Kiva Systems Available to General Market for at Least Two Years

Fulfillment Center Growth Simply Consuming Available Capacity, Senior Manager Says; Decision will be Reviewed Again in Two Years


 SCDigest Editorial Staff

When the surprising news came in 2012 that was acquiring Kiva Systems, there was rampant discussion in the industry as to why the ecommerce giant would buy a supply chain technology provider - and what its post-acquisition strategies would be.

SCDigest Says:

Gilmore suspects that some years down the road, whenever Amazon's pace of building new FCs slows down, it will spit Kiva out as a separate company again or sell it to a major materials handling vendor.
What Do You Say?
Click Here to Send Us Your Comments
Click Here to Post or See Reader Feedback

Amazon laid out a whopping $775 million to acquire Kiva in early 2012. Kiva was the developer of an automated picking system, in which orange robots would deliver goods to workers in pick cells, from which they would select individual items to put into cartons or totes, often in efulfillment operations.

In a sense, Kiva's solution can be said to have ushered in the "goods to picker" thinking that is manifesting itself in many ways in materials handling applications, especially but not exclusively for efulfillment.

While the system can be deployed modularly, if it is taken to the full extent, with hundreds of Kiva robots moving around a DC, the very nature of traditional fulfillment operations is dramatically transformed.

Amazon has Been Silent about Its Plans

From the start, there have been many questions about Amazon's plans for Kiva. Was Amazon trying to lock up a valuable technology so that competitors such as and many others would not be able to deploy the Kiva system? Would Amazon allow the Kiva solution to be sold to any other companies? Would Amazon be putting Kiva into all of its fulfillment centers?

While rumors and conjecture spread for a while around the materials handling industry, Amazon was almost completely silent on the issue, even declining to answer questions from Wall Street analysts on its Kiva plans during subsequent quarterly earnings calls, to the point where the analysts after a couple of quarters stopped asking about the issue altogether.

In addition, Kiva stopped advertising and other marketing activities, such as trade shows, and there was certainly no news of customers outside of Amazon deploying the solution.

However, when it became clear earlier that Kiva was going to have a large booth at the MODEX trade show held a couple of weeks ago in Atlanta, many wondered if this was a sign that Kiva would now be getting back into the market.

The answer, it turns out, is No. The Kiva robots moving around in the display at MODEX were really just to gather attention for its recruiting efforts for managers and supervisors to staff its rapidly growing network of fulfillment centers.

And that network growth is why Amazon is not selling the Kiva System to others.

(Distribution/Materials Handling Story Continues Below )


Download Longbow Advantage

Business Briefs



The Keys to WMS Success,

Maximizing JDA WMS

Performance and More






A senior manager for Amazon told SCDigest that its stance on selling Kiva was recently reviewed again, and the decision was made to maintain the current policy of supporting only Amazon's internal needs. With more than a dozen new DCs being built each year just in the US, Kiva's capacity in terms of manufacturing and deploying its robots is simply consumed by Amazon's own requirements - and that is just for new fulfillment centers built in the US. It does not include international FCs, or as yet any retrofitting of the company's dozens of existing FCs, the manager said.

He added that this position will be revisited in a couple of years, and could conceivably be reversed at that time. That said, given Amazon's likely continued growth in FCs, plus the potential opportunities to retrofit existing FCs and also take the solution international, it seems likely that the decision will be the same two years hence, unless Amazon decides to make major investments in capacity over that time.

But does Amazon really have any incentive to do that?

"I wondered at the time if the real driver of Amazon's surprising acquisition of Kiva was to lock up its capacity, and that really seems to be the case. It did not want to have to compete for that capacity with other companies," says SCDigest editor Dan Gilmore. "But probably not so coincidentally, this scenario also means the Kiva solution is not available to Amazon competitors."

Gilmore suspects that some years down the road, whenever Amazon's pace of building new FCs slows down, it will spit Kiva out as a separate company again or sell it to a major materials handling vendor, at which point it would be available to other companies.

The Kiva manager also told SCDigest that virtually all major executives at the company, including founder and CEO Mick Mountz, are still with Amazon. We will note it is common for the executives at acquired companies to be offered attractive contracts, usually for three years, as part of the acquisition.

The Kiva manager said there has been some impact from Amazon on Kiva's research and development. That was most noticeable in having all the Kiva software be rewritten in the "web services" approach that the rest of Amazon uses, so it can more easily and flexibly integrated with Amazon's software stack.

He also said attention has been turned away from now from some other markets that Kiva was pursuing as an independent company, such as in the health care products fulfillment area that is of little interest to Amazon.

Any reaction to Amazon's Kiva marketing decision? Let us know your thoughts at the Feedback button (email) or section (web form) below.

Recent Feedback

Great piece on Kiva and Amazon, I actually saw the Kiva process in operation at a non-Amazon fullfilment center, very impressive!!  How is Kiva/Amazon supporting the existing Kiva operations in use currently in the marketplace?

Kirk Wright
Mgr/Support Services
TBB Global Logistics, Inc
Apr, 02 2014

It seems Kiva/Amazon is unwilling to support existing KIVA installations (pre-Amazon) with replacement bots. You can buy parts but not the complete bot. This is contrary to representations made to us.

Anyone else (from an existing install) have any better luck?


Peter Smith
Jul, 10 2014