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Focus: Distribution/Materials Handling

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

From SCDigest's On-Target E-Magazine

- Dec. 9, 2014 -


Supply Chain News: Amazon Keeps Moving, with Bike Delivery Tests, New Private Label Line, Aggressive Robot Rollout and More

Company Putting Heat on FAA to Allow Drone Testing, as Whole Industry is Moving Overseas


SCDigest Editorial Staff


Another week, more new programs and fulfillment innovation at

First, the Wall Street Journal reported this week that Amazon is testing bike couriers in New York City in an effort to deliver on-line orders in one hour or less. The report says Amazon has been holding time trials using bikes riders from at least three courier services to identify which is the speediest and most diligent for the bicycle-based delivery mode.

SCDigest Says:

Each Amazon Elements package will have a unique code that can be scanned using the Amazon mobile shopping app to track the specific ingredients and their origins; its date and place of manufacture, date of delivery, and 'best if used by' date.
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The bike service has been dubbed "Amazon Prime Now" and is operating out of the company's new building in Manhattan.

This obviously opens up a new fulfillment path in addition to use of its own trucks, commercial taxis, drones and other approaches the company has tested in the past year or so.

The Amazon Prime Now test marks the company's first US move into superfast delivery, where it faces challengers that include eBay's eBay Now service as well as startups like WunWun, Postmates, and car-for-hire firm Uber Technologies, which launched its own bike courier service in New York City called Uber Rush earlier this year. eBay, however, is said to have scaled back the ambition of its eBay Now service, which dispatches "valets" to stores to retrieve merchandise, acknowledging the challenges of one-hour delivery, whether operational or relative to the current size of the market.

Relative to drones, Amazon is said to have recently begun testing drones in the UK even as it presses US regulators to let it expand drone testing here. Amazon is also said to be testing drones in India, while Google is reported to be doing the same in the Australian Outback.

Amazon hopes to use drones to deliver small orders in 30 minutes or less. However, the Federal Aviation Administration (FAA) has effectively banned commercial drone use, including test flights, until it completes rules for unmanned aircraft in the next several years.

Individual companies, however, can apply for exceptions to the ban, but the process has been slow. Amazon announced this week that it would move even more of its drone research to other countries if it doesn't get permission for drone testing in the US soon, the latest sign that the fast- growing industry is shifting overseas in response to the FAA's cautious approach.

"Without the ability to test outdoors in the United States soon, we will have no choice but to divert even more of our [drone] research and development resources abroad," Paul Misener, Amazon's vice president of global public policy, said in a letter to the FAA on Sunday.

In July, Amazon asked the FAA for permission to test drones in a rural area near its Seattle headquarters. The FAA responded in October, asking Amazon why it doesn't pursue a different exemption process and why its delivery drones are in the public interest.

The FAA policy has riled US drone makers and entrepreneurs who say they are falling behind peers in places like Germany, France and , where drone rules are looser. The US has fewer than 10 approved commercial drone operators while Europe has thousands.

The Kiva Robots Keep Coming

Meanwhile, Amazon also said it is ahead of earlier predictions relative to the number of Kiva robots it has deployed in its fulfillment centers.

The company announced last week it has deployed about 15,000 Kiva robots in 10 fulfillment centers across five states to support order picking. That's up from a figure of 10,000 that founder and CEO Jeff Bezos projected this past May.

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This just a couple of year after Amazon acquired Kiva Systems in a stunning deal worth $775 million in 2012, for a company that at the time had just a few tens of millions of dollars in annual sales. Amazon says the robots reduce picking costs by 20%, and allow it to double the inventory a DC can hold. The Kiva robots, which deliver goods to stationary order pickers, can really be said to have ushered in the currently highly popular "goods to picker" operating concept.

Alas, it doesn't appear Amazon is going to make the Kiva system available to other shippers any time soon.

Amazon Enters Private Label Market

Amazon also announced a new line of private label products, starting with baby supplies such as diapers and wipes, under the Elements brand banner.

The new products will compete in what it is something like an organic segment of the baby supplies sector, touting that complete transparency to each product's make up, origins, etc., supported of course by mobile apps that will display all that info and more upon the scan of a bar code.

It says the Elements line will be for consumers "who have high standards, want premium products and want to know more about those products."

The details provided are very specific. For example, a customer will be able to find out where the water in their wipes comes from, down to the exact aquifer. "We are dedicated to providing this level of detail so that customers can make the best decisions for their families," an Amazon spokeswoman said.

Each Amazon Elements package will have a unique code that can be scanned using the Amazon mobile shopping app to track the specific ingredients and their origins; its date and place of manufacture, date of delivery, and 'best if used by' date.

Interestingly, the Essentials products - for now at least - will only be available to Amazon Prime members. The offering is cost competitive for the high end. Last week, a 160-count package of Amazon Elements diapers cost about $45 for Prime members, while a 192-count of Kimberly Clark's Huggies diapers purchased on Amazon went for a little more than $47.

These first two products appear to be just the beginning as the company's aim at "everyday essentials" could likely include cleaning products and more.

With Amazon huge sales and rapid growth, if it was to enter the private label market in a big way (it has dabbled in it in the past) it could be a huge shock to the consumer packaged goods industry.

Any reaction to all th Amazon news?  How big an impact would there be from Amazon going aggressive with private label?
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