In case you can’t tell, Amazon currently offers same-day shipping in New York City, Atlanta, Baltimore, Boston, Chicago, Indianapolis, Philadelphia, Washington D.C., Dallas, Los Angeles, Phoenix, San Francisco, and Seattle. The map hints that Florida, Tennessee, and Virginia could each make good same-day delivery expansion targets.

Right now, Piper Jaffray analysts estimate that the locations of Amazon’s fulfillment centers bring it within 20 miles of 31% of population, but within 20 miles of 50-65% of its core same-day addressable market (Jaffray came to this higher percentage by predicting that only households with an annual income of $50,000 would be interested in same-day delivery).  Business Insider, March 2015

I see this non-compete contract enforcement as a sign that Amazon is treating there logistics investment as a defensible. The temporary warehouse staff is an asset that could on departure put Amazon into a place which would make them a target for their competitor.

I also believe that Amazon is indirectly concerned over the on demand delivery startups such as Instacart, Shyp and others whom would be providing services to Amazon competitors with contractors instead of staff. The fact that these on demand startups are highly dependent on contractors to do the fulfillment highlights the fact that human workforces are the most prized asset for ecommerce fulfillment.

After The Verge broke this story Amazon has started the process to remove this clause from hourly associates contracts.

Amazon is to remove a “non-compete” clause from its employment contracts for US workers paid by the hour after criticism that it is unreasonable to prevent such employees from finding other work.

A company spokeswoman confirmed to the Guardian that the clause would be cut.

“That clause hasn’t been applied to hourly associates, and we’re removing it,” she said. The Guardian, March 2015

Notice that the news was reported by The Guardian, instead of The Verge, a sign that this topic was not going to be resolved by replying back to the origin of the story. The questions which is raised for me is, If The Verge did not break this exclusive story would Amazon have removed this clause from hourly associates contracts?

A long term solution

Amazon seems to be indicating that warehouse automation and usage of robotics will be the long term solution. Amazon bought Kiva Systems in March 2012 partly to automate some of their own warehouses after acquiring the Quidsi business.

In May 2015 Amazon has a picking challenge for universities and other interested parties.

Automated item picking is an important skill for many robot applications including warehousing, manufacturing, and service robotics. Generalized picking in cluttered environments requires the successful integration of many challenging subtasks, such as; object recognition, pose recognition, grasp planning, compliant manipulation, motion planning, task planning, task execution, and error detection and recovery.

In an automated Amazon warehouse, thousands of mobile robots move 1-meter square shelving units from storage locations to picking stations and then back to storage. Associates stand in the stations and pick items off the shelves and put them into boxes that are shipped to customers. A typical bin on a shelf will have up to 10 items in it–often packed tightly together–and the associate is able to identify the right product, pick it out of the bin, scan the barcode for verification, and put the item in a box, all in only a few seconds. A typical Amazon warehouse holds several million different products. While many of these items are regularly shaped, like books and DVDs, there are also teddy bears, children’s necklaces, vacuum-packed USB sticks, and thousands and thousands of other shapes, sizes, and materials.

The first Amazon Picking Challenge poses a simplified version of the picking task. Contestants’ robots will be placed in front of a stationary Kiva shelf. The contest shelf will be relatively lightly populated, with many of the bins holding only a single item, and a few holding multiple copies of the same item. A few bins may hold multiple different items. The products will range in shape and size. Some will be solid cuboids, but some will be items that are pliable and/or harder to grasp.

Robots are the logical long term solution for any ecommerce business that does it’s own fulfillment. Would this not be better solved with a pay raise for the temporary warehouse workers that work alongside the robots?