Amazon buys Kiva Systems, shipping robotics company, for $775 million
The Amazon logo is projected on a screen at a press conference in New York on Sept. 28, 2011.
Online retailer Amazon has made a deal to buy Mass.-based shipping robotics company Kiva Systems Inc. for about $775 million in cash, MarketWatch reported. Privately held Kiva makes robots that move items around warehouses, according to Bloomberg Businessweek.
The Kiva Systems acquisition is Amazon's second largest, according to S&P Capital IQ, MarketWatch reported. Amazon’s largest takeover so far has been online retailer Zappos.com, for which it paid $894.6 million in 2009.
"Amazon has long used automation in its fulfillment centers, and Kiva's technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow," Amazon Vice President Dave Clark said, Bloomberg Businessweek reported.
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According to MarketWatch:
Amazon's purchase comes as the Seattle company builds out multiple fulfillment centers used to ship orders. While Amazon has traditionally opted for a fulfillment center design that relies to a large degree on human labor, its acquisition of Kiva Systems suggests that the company is now looking at a more automated approach amid its heady growth.
Recently, Amazon has been splashing out on technology for its order-fulfillment centers, Bloomberg Businessweek reported. Amazon spent $4.6 billion on its warehouses last year, the company’s largest operating expense at 9.5 percent of sales, according to Bloomberg Businessweek. The company built 17 new fulfillment centers in 2011, and plans to construct more warehouses in 2012, MarketWatch reported.
“[The deal] is an internal infrastructure play, and it comes at a time when their headcount has been growing faster than revenue,” Colin Gillis, an analyst with BGC Partners LP in New York, told Bloomberg Businessweek. “One of the knocks on Amazon is that their fulfillment is an expensive, manual process. They’re not getting the benefits of scale. So they’re taking some steps towards it.”
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