Post #5: Fulfilled by Amazon - Heptagon Capital – Production

The yellow roof of the building glistens in the pale winter sunlight from some distance away. The grey complex grows in size as it comes closer into view.

Post #5: Fulfilled by Amazon

The yellow roof of the building glistens in the pale winter sunlight from some distance away. The grey complex grows in size as it comes closer into view. Welcome to LCY2, Amazon’s largest fulfilment centre in Europe (located in Tilbury, Essex), which your author visited earlier this week. 

We are all familiar with receiving everything from books to batteries courtesy of Amazon, but often take for granted the complexity of the process, the immense logistics required for that online click to become a physical item delivered to the customer. LCY2 runs two 11-hour shifts daily and is responsible for delivering around 25% of all the UK’s Amazon packages (as well as many more to the continent). For such a process to run smoothly and efficiently, two things are required: a lot of space and some very intelligent automation.

Begin with space. LCY2 is some 2m square feet in size. This is equivalent to 28 football pitches. Inside, there are around 14 miles of conveyer belt moving goods around the centre. The employees at LCY2 are assisted in their tasks by 2,600 Kiva robots. Each robot, bright orange in colour, is about the size of a manhole cover and can carry a load of up to 1500 pounds (the same weight as a large cow). Amazon estimates that it can, with robots, accommodate 50% more storage on site than in their absence owing to the more efficient use of space. In the areas where goods are stored, no walkways for humans are required, as the robots move on an automated grid. 

It is hard not to be impressed with the slickness of the operation. Yet, with less than 20% of all retail purchased online, this is just the beginning. LCY2 is a ‘version nine’ fulfilment centre, the most modern across Amazon’s 175-centre global footprint. Nonetheless, Amazon is already working on ‘version ten.’ Expect even more automation, and maybe drones too…

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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