In March 2012, Amazon made a move that would reshape warehouse automation forever. The company acquired Kiva Systems for $775 million, marking what was then Amazon's second-largest acquisition in its history. At the time, Kiva's mobile robotic systems showed how fulfillment centers could work completely differently than before.
Before this deal, the traditional material handling industry operated in its own world. Conveyor manufacturers, sortation system providers, storage rack suppliers, automated guided vehicle (AGV) makers, and warehouse software developers all served as external vendors to companies like Amazon. But the Kiva acquisition changed this dynamic completely. Amazon wasn't just buying robots anymore. It was positioning itself to build its own automation technology from the inside out.
After acquiring Kiva Systems, Amazon began a strategic shift. Instead of relying on third-party suppliers and integrators for all its warehouse equipment, the company started developing internal capabilities. This wasn't just about supporting Amazon's own fulfillment centers. It was about gaining leverage over the entire supplier ecosystem.
The ripple effects hit traditional conveyor and automation vendors hard. Companies like Dematic, Honeywell Intelligrated, and others suddenly found themselves in an awkward position. One of their biggest customers was now learning their trade secrets and developing competing capabilities.
Amazon's strategy became clear through several moves:
Industry presence and talent acquisition: Amazon became a regular presence at major material handling trade shows. The company actively recruited engineers, project managers, and integration experts from established suppliers. While specific hiring numbers aren't publicly available, industry insiders noticed the brain drain. Amazon was speaking the language of conveyors, sortation, and automation with increasing fluency.
Supplier pressure: With its massive logistics footprint, Amazon demanded faster implementation, lower costs, and tighter integration from its suppliers. The company increasingly asked for customized features and exclusive capabilities. Commodity automation vendors saw their profit margins shrink and their leverage disappear.
Then the pandemic hit, and everything intensified. E-commerce surged. Labor became scarce. Supply chains broke down. Consumer expectations for fast delivery skyrocketed. Amazon's fulfillment network responded at massive scale, and so did its automation investments.
The COVID-19 pandemic drove unprecedented demand for warehouse automation. The pandemic caused a surge in e-commerce and a critical shortage of labor, which highlighted the need for automation and boosted robotic deployments.
By January 2020, Amazon had deployed 200,000 robots in its warehouses. This growth continued through the pandemic years and beyond. By mid-2025, Amazon deployed its one millionth robot, building on its position as the world's largest manufacturer and operator of mobile robotics.
For traditional material handling equipment suppliers, Amazon's growing capabilities created a difficult situation. They were dealing with a customer that:
Large-scale integrators like Dematic and Honeywell Intelligrated found themselves being challenged by the biggest integrator of all: Amazon itself.
The current landscape looks dramatically different than it did in 2012. Amazon has moved far beyond just using material handling equipment. The company is now deeply involved in designing, manufacturing, and integrating its own systems.
Amazon Robotics expansion: The former Kiva Systems has evolved into a major robotics development arm. Amazon now operates a diverse fleet of robots, including Hercules robots that can lift and move up to 1,250 pounds, Pegasus robots that use precision conveyor belts, and Proteus, Amazon's first fully autonomous mobile robot that can safely navigate around employees.
Advanced technology integration: Amazon introduced DeepFleet, a generative AI foundation model designed to coordinate robot movements across fulfillment centers, improving robot travel efficiency by 10%. This level of sophistication shows Amazon isn't just buying automation technology anymore. The company is inventing it.
Strategic positioning: While there have been media reports about Amazon's interest in acquiring additional integrators, Honeywell acquired Intelligrated for $1.5 billion in 2016, with Amazon as a key customer. The strategic direction remains clear: Amazon wants deeper ownership of the entire hardware and software stack.
Supplier relationships: Amazon's relationships with conveyor and automation vendors have evolved significantly. As a massive customer for large-scale automation, Amazon has the bargaining power to demand favorable terms, exclusivity, and custom features. This leverage potentially allows the company to move further upstream into manufacturing and integration.
Amazon's transformation from customer to competitor has created major challenges for the material handling industry:
Margin pressure: Suppliers face constant pressure on pricing and profitability. When your largest customer knows your costs and capabilities intimately, maintaining healthy margins becomes difficult. Amazon's demands for intellectual property access and custom-built solutions further erode profitability.
Competitive threat: As Amazon internalizes more of its material handling production, the addressable market for third-party vendors shrinks. Companies that once counted on Amazon as a growth driver now face the prospect of losing that business entirely.
Innovation requirements: To stay relevant, suppliers must develop faster, smarter, and more modular automation systems. The bar keeps rising, and Amazon's internal capabilities define that bar.
Strategic shifts: Many suppliers are refocusing their efforts on smaller e-commerce customers or geographic regions where Amazon's influence is less dominant. This strategic retreat represents a significant market realignment.
Industry consolidation: The pressure is driving mergers and partnerships as companies seek scale and competitive advantages. System integrators are specializing in non-Amazon niches to survive.
Based on Amazon's trajectory, several trends will likely reshape the material handling industry:
What started in 2012 as a straightforward acquisition of a robotics company turned out to be much more. Amazon's purchase of Kiva Systems was a signal of a fundamental industry transformation. By moving into the heart of automation and material handling equipment, Amazon became not just the dominant user of such systems but a major force reshaping how the entire industry works.
For conveyor and automation manufacturers and integrators, Amazon represents both a powerful customer and an existential threat. The company buys massive quantities of equipment while simultaneously developing internal capabilities that could make those purchases obsolete.
Over the next decade, the material handling industry will likely look markedly different. It will be more integrated, more software-driven, and more dominated by large platform players. The barriers between operator, integrator, and manufacturer will continue to erode. And at the center of this transformation sits Amazon, a company that started by selling books online and is now redefining how products move through warehouses worldwide.
The question for traditional material handling companies isn't whether Amazon will continue this transformation. The question is how they'll adapt to survive it.
The material handling industry is evolving faster than ever and staying informed isn't optional anymore. Whether you're a warehouse operator evaluating automation investments, a supplier navigating the changing competitive landscape, or a logistics professional planning your next career move, understanding these shifts gives you a strategic advantage.
Want to keep up with the latest developments in warehouse automation and material handling? Reach out to find out how Conveyco can help your warehouse compete in this ever-changing market.
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