Amazon says they plan to have Zoox realize its vision of passenger transport (robotaxi) service, which I will dub “AMAZOOX.” At the same time, it is hard to believe they don’t also have interest in robotic delivery and logistics, since that’s a huge part of their business. I have already done analysis twice on this deal — first when Zoox started shopping, and then when Amazon was revealed as the suitor. All the analysis in these articles remains similar. Today, two things become fact — the confirmation of the deal and Amazon’s declaration that they wish to support the robotaxi vision.
Make no mistake, though. The robotaxi business has the potential to be larger than the retail business that Amazon dominates. People spend close to 5 trillion dollars annually on ground transportation. While no one company will grab it all, the dominant company has the potential to become the world’s largest company (if it wasn’t on track for that already.) This is true even though it may be decades before robotaxis are available everywhere, and even though there will be multiple players, and even though robotaxis will eventually make transportation much cheaper, reducing some of that revenue.
While this does not match Amazon’s business, Amazon has been happy to branch out to many areas beyond its initial market in books, and now has leading positions in smart speakers, video streaming, ebook readers and tablets and other areas. Amazon’s huge cash resources make it one of the few companies with the capital to carry out the big bold vision of Zoox, to completely reinvent the passenger car. Detail of the Zoox custom vehicle with 4-wheel
In spite of Amazon’s statement about the robotaxi business, this also can mean big changes in the logistics and delivery business which is core to Amazon. While a human-driven truck with 150 packages in it does not cost much per package for the human driving, there is a large desire for on-demand delivery. People want it for restaurant food and perishables, but for many other things they want in a hurry. Many also need to receive deliveries when they are home and can’t easily take deliveries that are just dropped on the porch. Robots work on the customer’s schedule, and thus will only come to you when you’re home.
The ability to deliver anything in an Amazon warehouse on short notice will be a very attractive product. The cost of robot delivery will be low enough to be bundled in with Amazon Prime. If you can get anything in one of those giant Amazon warehouses in 30 minutes, that’s scary news for the rest of retail. It’s actually good for the other robotic delivery companies (including Starship, where I am a stockholder) because it means Amazon’s retail and delivery competitors will have no choice but to work with other robotic delivery companies if they want to stay alive. It’s bad news for UPS, Fedex FDX, DHL and the post office.
Amazon also does a lot of long haul trucking. While Zoox has not attempted to apply its tools to trucking, and thus there is work to do, it is comparatively easy to adapt them to that market, cutting the costs of Amazon’s other logistics efforts. Amazon began automating logistics with its acquisition of Kiva back in 2012. Humans still pack the boxes, but soon that may be the only job a human does in moving a product from a warehouse shelf to your door. While this is vastly less than the more than $3B at which Zoox was valued at is peak, it solves all of Zoox’s problems. If Jeff Bezos wants to carry through the Zoox vision, he has the resources to take that bet. It may be bad news for the early employees and founders of Zoox — in a typical venture deal, the investors who put in the early money get their money back first, and so almost all the money from this deal may flow to them. Possible good news for Zoox is the ability to continue their quest for a custom vehicle design — an ambitious and expensive plan. Now the resources are available. Whether that is the right choice or not I have discussed extensively in the articles linked above and my article on the wisdom of the Zoox strategy.