Amazon Has Robots in Its Warehouse. What About You?

September 15, 2015

The hustle and bustle that happens during the months of November through January can be the most profitable time of the year, if you know how to handle the mania. Last year, Amazon failed this test when it couldn’t keep up with orders and ended up having to offer rebates to customers who didn’t receive their purchases on time. This year, the company, which typically earns 1/3 of its annual revenue during holiday months, announced it was prepared for business during the holiday craze in two ways: a 14% increase in temporary warehouse workers and the use of robots, more than 15,000 of them, to guarantee all orders would be delivered on time.

Robots replace human muscles

Amazon’s robots came from its $ 775 million cash purchase in 2012 of robot-maker Kiva, a Massachusetts company. During the past peak season, the Roomba-like robots glided around Amazon’s 1.2 million square foot warehouse in Tracy, Calif. at a speed of 5 mph, lifting as much as 750 pounds of 4’ by 6’ shelving units. These shelves are brought to employees at their stations to be sorted, picked, checked for quality, and boxed. The robots spare human workers from walking as much as 20 miles a day and allow Amazon to hold 50% more inventory, because aisles no longer need to be wide enough for humans.

How small business owners can compete

Not every company has millions of dollars sitting around to be used on robots, so how can small businesses compete? Consumers today are willing to abandon the brick-and-mortar shopping experience, but only if they know orders will be delivered in a timely manner. Modern consumers no longer find it acceptable to wait weeks for their purchases. They want the ease and inventory advantage of ordering online but also expect the immediacy of going into the traditional brick-and-mortar.  In fact, one of the primary reasons small businesses fail is truly poor inventory management. If customers can’t find what they need while in your store or they don’t have the option for home delivery, that’s just another lost sale.  It’s easy to see the long-term implications of not meeting customer demands.

Here are a few resources Amazon uses that small businesses can afford to adopt:

  1. Proper Tracking 

The first step in delivering orders on time to customers is to know exactly what you have in stock. An inventory management system will ensure you have products available when needed and also notify you when items need to be restocked. According to the State of Small Business Report, 46% of small businesses do not currently track inventory or use a manual process. However, this real-time information is extremely valuable when it comes to satisfying customers who expect orders delivered by a fixed date. According to a survey conducted by Econsultancy, 50% of respondents say they will abandon an online order if delivery options don’t satisfy their needs. 31% of consumers want a fixed delivery date and 24% expect next day delivery or the ability to pick up their purchase from a store.

  1. Collect Useful Data

Online businesses don’t have the advantage of face-to-face time with customers. To make up for this shortcoming, collecting useful information and knowing the best way to use that information will improve your business. By taking into account past purchases, wish lists, and even how long a user’s cursor hovers on an item can help determine purchasing patterns and gives businesses the ability to forecast what their customers want to purchase. Having this information on file helps small businesses determine which items should always be in stock; guaranteeing faster, more efficient shipping.

  1. Take Advantage of Virtual Inventory

To save space, Amazon uses virtual inventory and businesses with limited space can adopt a similar business strategy. Virtual inventory allows businesses to sell products without having to store those items in-house. Instead, inventory can be kept in warehouses, third-party fulfillment providers, distribution centers, or different store locations. When customers place an order, businesses using virtual inventory will need to have a proper inventory tracking system in place to quickly determine product location and appropriate delivery methods.

While order fulfillment robots may be out of the typical small business owner’s reach, there are incredibly cost-effective inventory management systems specifically tailored to the needs of small business.  These systems ensure products are available and delivered to customers in a timely manner; which increases a company’s efficiency and profit.  While your business may not have a 1-million square foot warehouse like Amazon, you can successfully implement lean inventory practices, ensuring your customers are satisfied every time they purchase your products.

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