Amazon to Invest $1B In Logistics and Supply Chain Innovation

Amazon has long looked ahead to streamline, automate, and otherwise supercharge its logistics and supply chain to out deliver its competitors. 

Apparently relying on internal ideas and expertise isn’t enough. The company said it is “investing $1 billion to spur supply chain, fulfillment, and logistics innovation and further improve the customer and employee experience.”

A new venture investment program called the Amazon Industrial Innovation Fund will invest in companies that can help “incrementally increase delivery speed and further improve the experience of employees working in warehousing and logistics fields.”

“These industries are inherently complex,” Alex Ceballos Encarnacion, Amazon’s vice president of worldwide corporate development said in prepared remarks.  “With our scale, Amazon is committed to investing in companies that will ignite innovation in emerging technologies that can help improve employee experiences and safety while seamlessly coexisting with workforces across the supply chain, logistics, and other industries.”

The fund’s first round of investments went to the following companies:

• Modjoul, which develops wearable safety technology;
• Vimaan, working in computer vision and AI solutions for inventory management;
• Agility Robotics and its bipedal robotic tech to increase the types of work robots can do;
• BionicHIVE, building floor-to-ceiling autonomous robotics that can adapt to existing shelving and boxes; and
• Mantis Robotics, which is developing a “tactile robotic arm” that could allow a greater range of packing shipments, an area of automation that is relatively weak.

To put things into perspective, Amazon’s operating expenses in “technology and content” were $35.9 billion in 2021 alone, up from $28.8 billion in 2020. And at the end of 2021, it had $36.2 billion in cash and cash equivalents on hand. So, the billion dollars, which is a big sum of money, is small in comparison. Also, Amazon did not mention the time horizon over which it will invest the money.

While Amazon’s move is innovative, it’s also not so abnormal in the history of retail. Big operations regularly worked with members of their supply chains to improve how things worked. In 2000, the CEO of Kmart said to improve things at the company, it would make “effective end-to-end improvements and investments in Kmart’s supply chain.”

Walmart has for years looked at how to work with its supply chains to improve efficiency. More recently, it has considered how to better compete with Amazon in supply chains. Last year, Target said it would invest $4 billion annually to improve stores and online order fulfillment.