Amazon Turns to AI to Speed Up Customer Deliveries

Amazon would use AI to speed up customer deliveries and decrease the distance that products need to travel before they finally reach customers.

Companies across the globe are embracing AI and Amazon – which is the world’s largest e-commerce platform – is also turning to AI.

Speaking with CNBC, Stefano Perego, Amazon’s vice president of customer fulfillment and global ops services for North America and Europe discussed how the company is incorporating AI to optimize its deliveries and logistics.

Perego said that Amazon would use AI to optimize the transportation of products and among others, it would help in predicting the weather along the route.

The company would also use AI to help customers find the desired products.

Perego said that Amazon would especially use AI for inventory management.

He said, “I’m sure you know about the wide range of options we provide to our customers. Think about how complicated it is to decide where to put that unit of inventory. We need to place it in a way that shortens the distance to fulfill customer orders and speeds up delivery.”

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Notably, amid its cost-cut push, Amazon has been optimizing its delivery mechanism and is moving to a more regional model.

It has divided the US markets into eight different regions and now 76% of the orders get fulfilled within the region – as compared to 62% a year back.

Amazon Turns to AI For Optimizing Deliveries

Perego also said that Amazon is now increasingly using robotics for completing repetitive tasks at fulfillment networks. Perego termed robotics as “collaborative robotic” and said they would “transform” and not “substitute” the jobs.

Notably, Amazon has announced 27,000 corporate layoffs this year. In absolute terms, its layoffs are the highest among FAANG peers.

The company has also cut the strength of warehouse employees after admitting to being overstaffed.

Almost all the tech companies are on a cost-cut overdrive and in March Amazon paused the construction of its HQ2 in Virginia – the site that it selected for its next headquarters after a nationwide competition in 2017.

However, things have changed since then and the revenue growth of tech companies has come down almost across the board.

Take for instance, in 2022, Amazon’s revenues rose by only 9% which is the lowest on record. Also, AWS revenue growth slumped to 20% in Q4 2022 which is the slowest since Amazon started to report the segment’s earnings separately.

Companies Turn to AI to Revive Their Fortunes

Along with cost cuts, AI has been another common thread among tech companies. While companies are cutting costs elsewhere – their purse strings are wide open when it comes to AI.

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Microsoft, among the investors of ChatGPT’s parent company OpenAI, has invested an undisclosed amount of money in Builder.ai – an AI startup that helps those without coding languages build applications.

Companies like Amazon see AI as a massive revenue opportunity as well as a tool to structurally lower their cost base.

Meanwhile, regulators are also scrambling to understand the risks and opportunities associated with AI.

Tomorrow, OpenAI CEO Sam Altman would testify before the Senate Judiciary subcommittee on privacy, technology, and the law on Tuesday in a hearing that’s titled – “Oversight of AI: Rules for Artificial Intelligence.”

The testimony was preceded by a meeting between US Vice President Kamala Harris and CEOs of OpenAI, Anthropic, Microsoft, and Alphabet.

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