February 8th, 2019

Amazon and traditional retailers

I don’t think I’ll see self-driving cars in the next 20 years (see here for my definition of what a self-driving car is).

I don’t think I’ll see general artificial intelligence in the next 20 years. The sort of general AI that can distinguish between what it means when you drive a car and see a soccer ball bouncing into the street, and see a empty plastic bag floating into the street. The sort of general AI that can understand that the former has a much higher chance of a small kid running into the street to chase that ball. The sort of general AI that we would need for that self-driving car utopia.

But I am 99% certain that in the next 5 years Amazon will have a fully automated warehouse that does not have any human presence on the floor. I keep on thinking about how “I, Robot” portrayed fully automated highway traffic at 180+ mph with barely any space left between vehicles. And I keep on thinking how much money Amazon will be able to shave off of every single physical purchase when they remove the last human operator from that chain. Except for the delivery vehicles of course. I don’t for a second believe that we’ll see automated delivery of any sort, be it ground vehicles or drones, in the next 20 years.

At that point, it’s pretty much game over for anybody else in the retailer space. I don’t think that anybody else – be it Walmart, Target, Home Depot, Office Depot, JC Penney etc – has the right blend of warehouse coverage and technological research into warehouse automation. And how likely is it that Amazon would be willing to share that automation technology with their competitors?

Of all the individual tech stocks that we own, I am by far the most optimistic about Amazon.