Amazon is using generative AI to drive more same-day shipping using smarter robots and better routes

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4 months ago

September 17, 2024

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For years, Amazon has set the bar for package delivery. When Prime launched in 2005, two-day shipping was unheard of. By 2019, one-day shipping was standard for millions of items. Now, the retail giant is turning to generative AI to drive more same-day shipping.

Amazon is using the technology to optimize delivery routes, make more intelligent warehouse robots, create more-ergonomic environments for employees and better predict where to stock new items, said Steve Armato, Amazon’s vice president of transportation technology and services.

During an exclusive tour of Amazon’s largest California sort center, located in Tracy, Armato told CNBC that 60% of Prime orders in March were delivered the same day or next day in the top 60 metropolitan areas in the U.S. Amazon is betting on generative AI to increase that figure.

“It seems subtle, but at this scale, getting just one more product in the right spot means that it’s shipping less distance when you order it,” Armato said in an interview at the warehouse.

In 2020, Amazon began developing models for demand forecasting and supply chain optimization using transformer architecture, the backbones of what we know today as generative AI.

“Generative AI is the next big evolution in technology,” Armato said. “It’s remarkable, and we’re already applying it in very practical ways across our operations.”

But not all the changes that generative AI may bring to the e-commerce giant are positive. There are concerns about the high-energy needs of generative AI and about its ability to enable robots to replace Amazon’s human workforce, analysts told CNBC.

Robots and new roles

The number of Amazon warehouse robots grew from 350,000 in 2021 to more than 750,000 in 2023, according to the company.

Amazon began adding AI transformer models to its warehouse delivery robots in 2022 so the machines can dash around each other more intelligently. CNBC watched hundreds of them move in a coordinated grid in the warehouse. Armato calls this “the dance floor.”

“Some of the two-day deliveries might stand aside, let the robot with a next-day delivery go on its mission first and take a straight line to its destination,” Armato said.

Hundreds of robots dash around each other with the help of generative AI at Amazon’s largest California sort center in Tracy, California, July 31, 2024.

Lisa Setyon

While these robots navigate using a series of QR codes, Amazon’s next generation of drive units, called Proteus, are fully autonomous, the company said.

“They’re using generative AI and computer vision to avoid obstacles and find the right place to stop,” Armato said.

As part of the company’s AI strategy, Amazon in August struck a deal with AI startup Covariant. Amazon hired the startup’s founders and licensed its models that help robots handle a wider range of physical objects. Amazon is also developing a bipedal robot called Digit that can grasp and handle items in a humanoid way.

CNBC saw a row of 20 robotic “Robin” arms that use computer vision to determine how much pressure to use when picking up various package shapes and sizes. Amazon said generative AI teaches the arms how to handle products they’ve never seen before based on data from similar products in Amazon’s vast catalog.

A similar model is used to better assess damaged items and keep them from shipping out. Amazon’s AI is three times better at identifying damaged products than humans are, the company said.

Introducing more robotics with generative AI without replacing human workers is a balancing act for Amazon, said Tom Forte, senior equity analyst at the Maxim Group.

“How can they implement automation to improve efficiency and manage labor expenses, but how can they do it in a way that complements their use of humans and doesn’t replace them?” Forte said.

Rather than replacing workers, the robots are reducing the burden on employees and creating new roles, Armato said. Amazon said it plans to spend $1.2 billion to upskill more than 300,000 employees by the end of 2025 as generative AI and robotics change the company’s processes.

“Someone needs to maintain [the robot] if it breaks down,” Armato said. “Or if something does get dropped on the dance floor, we have a process and special training to go clean that up. And so each of those creates new categories of jobs, some of which have higher earnings potential.”

Amazon has faced scrutiny in recent years over its workplace injury record, with federal citations for safety violations and a yearlong Senate probe that found that Amazon’s big annual sale, Prime Day, was a “major” cause of worker injuries. Amazon appealed the citations and said the report ignores progress it’s made.

Many of Amazon’s robots move tall bins of items to workstations where employees pick and pack them, which reduces how much humans have to walk, Armato said. AI is also reducing the need for workers to reach and bend, he said.

“One algorithmic improvement is to take our faster-selling products and place those on the shelves at waist height,” Armato said. “That’s your ergonomic power zone.”

Robotic drive units bring tall stacks of items to workstations for picking and packing at an Amazon same-day center in Richmond, California, Aug. 31, 2024.

Katie Tarasov

Predicting orders and routes

With all those robots and workers, Amazon delivered more than 2 billion items the same day or next day in the first quarter of 2024, according to the company.

Amazon has always used algorithms to predict how much of what inventory is needed, when and where. The company said it’s using generative AI to predict where best to place items it hasn’t previously sold.

“When we place a product in the right place ahead of time, before you click buy, it’s traveling less distance, which is a win for speed and sustainability,” Armato said.

Amazon Web Services has data centers filled with servers running AI workloads that give the company an edge over its retail rivals because it can train its AI in-house. As an early online-only retailer, Amazon got a head start on collecting mass aggregate data on shopping behavior and delivery logistics. Amazon is now using that trove of data to create AI models for use in everything from supply chain optimization to warehouse robotics, according to the company.

“It’s not that Walmart and Target and Costco and others don’t have their own reams of data, but they’re looking at things a little bit differently, and they have much older systems,” said Sucharita Kodali, retail analyst at Forrester Research.

How eco-friendly generative AI will be in the long run is unclear. That’s because training and running generative AI is a carbon-intensive process, and by 2027, AI servers worldwide are projected to use as much power every year as Sweden or the Netherlands.

That’s in conflict with Amazon’s 2019 commitment to reach net-zero carbon by 2040.

The company claims that the use of AI is helping cut down the carbon footprint of package delivery. Amazon is reducing carbon by using more than 20 machine learning models to improve mapping for its vast network of 390,000 delivery drivers, predicting road closures and choosing more efficient routes, the company said.

Beyond its warehouses, Amazon has also introduced generative AI to help its sellers and shoppers.

The company’s new Amazon Personalize AI tool generates hyper-personalized product recommendations. Sellers can also use generative AI to write highly targeted product descriptions or generate images of their products in different “seasonal and lifestyle” settings.

For shoppers, Amazon in 2023 began populating its website with AI-generated summaries of product reviews, and in February, the company launched a generative-AI powered conversational shopping assistant called Rufus.

Additionally, Amazon said, it has invested $4 billion in AI startup Anthropic, which makes chatbot Claude, a competitor to OpenAI’s ChatGPT. Amazon also makes its own AI-focused microchips and its own generative AI tools for developers, which it also uses in operations, the company said.

Whether Amazon’s huge investment in generative AI will translate to profits remains an open question.

“I have yet to see huge lift in anybody’s retail business due to generative AI, including Amazon,” Kodali said. “I think a lot of their biggest impact has happened because of the earlier investments, not necessarily some of these more recent investments.”

Watch the video for more on how Amazon is using AI.

Technology

Apple’s market share slides in China as iPhone shipments decline, analyst Kuo says

Published

12 hours ago

January 10, 2025

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Apple's market share slides in China as iPhone shipments decline, analyst Kuo says

Jaap Arriens | Nurphoto | Getty Images

Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock slid 2.4%.

“Apple has adopted a cautious stance when discussing 2025 iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added that despite the expected launch of the new iPhone SE 4, shipments are expected to decline 6% year over year for the first half of 2025.

Kuo expects Apple’s market share to continue to slide, as two of the coming iPhones are so thin that they likely will only support eSIM, which the Chinese market currently does not promote.

“These two models could face shipping momentum challenges unless their design is modified,” he wrote.

Kuo wrote that in December, overall smartphone shipments in China were flat from a year earlier, but iPhone shipments dropped 10% to 12%.

There is also “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is driving hardware upgrades or services revenue, according to Kuo. He wrote that the feature “has not boosted iPhone replacement demand,” according to a supply chain survey he conducted, and added that in his view, the feature’s appeal “has significantly declined compared to cloud-based AI services, which have advanced rapidly in subsequent months.”

Apple’s estimated iPhone shipments total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo wrote. That is “below the market consensus of 240 million or more,” he wrote.

Apple did not immediately respond to CNBC’s request for comment.

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Technology

Amazon to halt some of its DEI programs: Internal memo

Published

12 hours ago

January 10, 2025

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Amazon to halt some of its DEI programs: Internal memo

Amazon said it is halting some of its diversity and inclusion initiatives, joining a growing list of major corporations that have made similar moves in the face of increasing public and legal scrutiny.

In a Dec. 16 internal note to staffers that was obtained by CNBC, Candi Castleberry, Amazon’s VP of inclusive experiences and technology, said the company was in the process of “winding down outdated programs and materials” as part of a broader review of hundreds of initiatives.

“Rather than have individual groups build programs, we are focusing on programs with proven outcomes — and we also aim to foster a more truly inclusive culture,” Castleberry wrote in the note, which was first reported by Bloomberg.

Castleberry’s memo doesn’t say which programs the company is dropping as a result of its review. The company typically releases annual data on the racial and gender makeup of its workforce, and it also operates Black, LGBTQ+, indigenous and veteran employee resource groups, among others.

In 2020, Amazon set a goal of doubling the number of Black employees in vice president and director roles. It announced the same goal in 2021 and also pledged to hire 30% more Black employees for product manager, engineer and other corporate roles.

Meta on Friday made a similar retreat from its diversity, equity and inclusion initiatives. The social media company said it’s ending its approach of considering qualified candidates from underrepresented groups for open roles and its equity and inclusion training programs. The decision drew backlash from Meta employees, including one staffer who wrote, “If you don’t stand by your principles when things get difficult, they aren’t values. They’re hobbies.”

Other companies, including McDonald’s, Walmart and Ford, have also made changes to their DEI initiatives in recent months. Rising conservative backlash and the Supreme Court’s ruling against affirmative action in 2023 spurred many corporations to alter or discontinue their DEI programs.

Amazon, which is the nation’s second-largest private employer behind Walmart, also recently made changes to its “Our Positions” webpage, which lays out the company’s stance on a variety of policy issues. Previously, there were separate sections dedicated to “Equity for Black people,” “Diversity, equity and inclusion” and “LGBTQ+ rights,” according to records from the Internet Archive’s Wayback Machine.

The current webpage has streamlined those sections into a single paragraph. The section says that Amazon believes in creating a diverse and inclusive company and that inequitable treatment of anyone is unacceptable. The Information earlier reported the changes.

Amazon spokesperson Kelly Nantel told CNBC in a statement: “We update this page from time to time to ensure that it reflects updates we’ve made to various programs and positions.”

Read the full memo from Amazon’s Castleberry:

Team,

As we head toward the end of the year, I want to give another update on the work we’ve been doing around representation and inclusion.

As a large, global company that operates in different countries and industries, we serve hundreds of millions of customers from a range of backgrounds and globally diverse communities. To serve them effectively, we need millions of employees and partners that reflect our customers and communities. We strive to be representative of those customers and build a culture that’s inclusive for everyone.

In the last few years we took a new approach, reviewing hundreds of programs across the company, using science to evaluate their effectiveness, impact, and ROI — identifying the ones we believed should continue. Each one of these addresses a specific disparity, and is designed to end when that disparity is eliminated. In parallel, we worked to unify employee groups together under one umbrella, and build programs that are open to all. Rather than have individual groups build programs, we are focusing on programs with proven outcomes — and we also aim to foster a more truly inclusive culture. You can read more about this on our Together at Amazon page on A to Z.

This approach — where we move away from programs that were separate from our existing processes, and instead integrating our work into existing processes so they become durable — is the evolution to “built in” and “born inclusive,” instead of “bolted on.” As part of this evolution, we’ve been winding down outdated programs and materials, and we’re aiming to complete that by the end of 2024. We also know there will always be individuals or teams who continue to do well-intentioned things that don’t align with our company-wide approach, and we might not always see those right away. But we’ll keep at it.

We’ll continue to share ongoing updates, and appreciate your hard work in driving this progress. We believe this is important work, so we’ll keep investing in programs that help us reflect those audiences, help employees grow, thrive, and connect, and we remain dedicated to delivering inclusive experiences for customers, employees, and communities around the world.

#InThisTogether,

Candi

Technology

Tesla recalling 239,000 vehicles in U.S. over rearview camera failures

Published

12 hours ago

January 10, 2025

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Tesla recalling 239,000 vehicles in U.S. over rearview camera failures

New Tesla Model 3 vehicles on a truck at a logistics drop zone in Seattle, Washington, on Aug. 22, 2024.

M. Scott Brauer | Bloomberg | Getty Images

Tesla is voluntarily recalling about 239,000 of its electric vehicles in the U.S. to fix an issue that can cause its rearview cameras to fail, the company disclosed in filings posted Friday to the National Highway Traffic Safety Administration’s website.

“A rearview camera that does not display an image reduces the driver’s rear view, increasing the risk of a crash,” Tesla wrote in a letter to the regulator. The recall applies to Tesla’s 2024-2025 Model 3 and Model S sedans, and to its 2023-2025 Model X and Model Y SUVs.

The company also said in the acknowledgement letter that it has already “released an over-the-air (OTA) software update, free of charge” that can fix some of the vehicles’ camera issues.

In 2024, Tesla issued 16 recalls in the U.S. that applied to 5.14 million of its EVs, according to NHTSA data. The recall remedies included a mix of over-the-air software updates and parts replacements. More than 40% of last year’s recalls pertained to issues with the newest vehicle in the company’s lineup, the Cybertruck, an angular steel pickup that Tesla began delivering to customers in late 2023.

Regarding the latest recall, the company said it had received 887 warranty claims and dozens of field reports but told the NHTSA that it was not aware of any injurious, fatal or other collisions resulting from the rearview camera failures.

Other customers with vehicles that “experienced a circuit board failure or stress that may lead to a circuit board failure,” which cause the backup camera failures, can have their vehicles’ computers replaced by Tesla, free of charge, the company said.

Tesla did not immediately respond to CNBC’s request for comment.