Amazon rolls out machines that pack orders and replace jobs

Amazon's push to reduce costs always ends up going after the obvious, but their cost structure is more like an iceberg, and they're going after the least effective parts. The majority of the costs have little to do with direct labor, but rather planning. Inventory costs, logistics costs, warehouse utilization, sales forecasting, etc.

There is far more to shipping costs than distance. A split shipment (two items in two boxes) will typically increase costs for an order by $3-6, whereas receive/stow/pick/pack labor costs are only on the order of $1/unit. And yet, nearly every order I place comes in multiple shipments.

Kiva has O(n^2) efficiency degradation with respect to the size of their fulfillment centers. They solve this problem by having smaller fulfillment centers. But that also means more fulfillment centers, which means more split shipments, and much higher shipping costs. They're literally spending dollars to save pennies.

Reverse logistics are incredibly expensive. I'm talking $10-20/unit in some cases. The Amazon marketplace, and their associated quality control problems with fake reviews and counterfeit products, have increased their product returns by several fold over the last decade.

15 years ago, Amazon's inventory turns were something like 17, now they're 6. That directly translates to increased holding costs...for every sqft of storage space they needed in 2005, they need three today to ship the same amount of product.

And fulfillment costs aren't the only place they're making dumb mistakes with priorities. They did their whole HQ2 search shenanigans, only to settle on the two cities that offered the highest tax subsidies. But if they chose to instead prioritize lower cost of living, they could have saved an order of magnitude more, considering the fact that they are planning on having several tens of thousands of high paid workers in their HQ2 cities. The COL increases alone from locating in expensive cities with obstructive housing policies will eat up far more than those tax subsidies are worth.

In the funniest of ironies, Amazon's growth-first mindset that defied Wall Street expectations has led to an invariably laser-focused expectation on revenue growth that they are now a slave to. The P/E premium that Amazon has relative to its industry competitors, carries an implied expectation that Amazon will one day be ~10x bigger than it currently is. And Amazon's equity-first compensation philosophy means that their compensation budget inherently relies on the stock price. Therefore, any decision that may be in the long term best interest of the company (such as dumping the brand perception nuclear bomb known as the Amazon Marketplace) is now no longer feasible: it will cut revenue, killing growth expectations, lowering stock prices, and forcing Amazon to pay more cash compensation, which will just cause prices to tank further.

If we were to judge how Amazon is doing based off of how well their PR releases jive with wall street ideas of what good business decisions look like, they are doing everything right. Unfortunately, wall street ideas are shit for actual profitability. And Amazon is suffering for it.

You said "fairly attractive" to them which might not be the best way to say that. Eating worms while lost in the woods isn't something that the vast majority would consider attractive but they would do it anyway to survive.

They really need to wrap the books with a piece of butcher paper or something. I keep getting books that slid around and got scuffed to heck by contact with the boxes. Since I have been buying more pricey collection quality books, I have been sending them back :|

It shouldn't be a shock. There's overwhelming data supporting the idea that tax incentives for low paying jobs never end up paying for themselves.

Such a shame that this is the top comment here. People at that level are watching their job options shrink at an incredible place. Qualify your statement; robots are only "better" because they are cheaper.