March 20, 2012

Amazon.com buys Kiva Systems Inc.

Giant online retailer to acquire the maker of robotic order-fulfillment technology for $775 million.

By Toby Gooley

Amazon.com Inc. announced on March 19 that it has agreed to acquire Kiva Systems Inc., the North Reading, Mass.-based maker of robotic order-fulfillment technology. Kiva's bright orange, lozenge-shaped "bots" are managed by complex control software and carry shelves filled with merchandise to order pickers. The company counts such retailers as Staples, Walgreens, Saks Fifth Avenue, Crate & Barrel, and Diapers.com among its customers.

Amazon's interest in Kiva stems from its desire to improve productivity "by bringing the products directly to employees to pick, pack, and stow," said Dave Clark, Amazon.com's vice president, global customer fulfillment, in a statement.

Amazon and Kiva are not strangers to each other; Kiva's technology is used by Quidsi Inc., parent of Soap.com and Diapers.com, which Amazon acquired last year. The orange bots also had been in use at online retailer Zappos, acquired by Amazon in 2009. (Zappos has since stopped using the Kiva system, at least at its Shepherdsville, Ky., distribution center.)

According to business reporter Scott Kirsner of The Boston Globe, the acquisition idea may have been percolating for some time. In 2010, Kiva CEO and founder Mick Mountz told Kirsner that his company has been in discussions with Amazon for a while, and that "we're both interested in working with each other." As for the Zappos and Quidsi acquisitions, Mountz continued, that "just accelerates the conversation with Amazon, if nothing else. Everywhere Amazon looks, they're buying a Kiva system."

"For the past ten years, the Kiva team has been focused on creating innovative material handling technologies," said Mountz in announcing the deal. "I'm delighted that Amazon is supporting our growth so that we can provide even more valuable solutions in the coming years."

For Kiva, the key word is "growth." Accelerating its expansion clearly has been a priority for the past two years, and Kiva has adjusted its senior management to reflect that goal. The company hired President and COO Amy Villeneuve in 2010, and in late 2011, Kiva let go of five of its vice presidents. In November 2011, one of Kiva's board members told The Boston Globe that the company is aiming to reach a billion dollars or more in revenue, and that some of the executives "were not the right contributors to scale to the next level" of growth.

Kiva's strategy seems to have paid off. The company has added many new customers, particularly in online retailing and apparel. Last year it moved to a greatly expanded new headquarters and nearly doubled its employee base. It recently opened an office in Europe and achieved an ISO 9001 quality certification in order to be eligible for European business.

Amazon said it will acquire all outstanding shares of Kiva for approximately $775 million in cash, "as adjusted for the assumption of options and other items." Subject to various closing conditions, the acquisition is expected to close in the second quarter of 2012.

To see Kiva's robots in action at Staples, click here.

More articles by Toby Gooley

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.

Resources Mentioned In This Article


Subscribe to DC Velocity


Feedback: What did you think of this article? We'd like to hear from you. DC VELOCITY is committed to accuracy and clarity in the delivery of important and useful logistics and supply chain news and information. If you find anything in DC VELOCITY you feel is inaccurate or warrants further explanation, please ?Subject=Feedback - : Amazon.com buys Kiva Systems Inc.">contact Editorial Director Peter Bradley. All comments are eligible for publication in the letters section of DC VELOCITY magazine. Please include you name and the name of the company or organization your work for.