Amazon’s Next Revolution: Warehouses That Think

Amazon's Robot Advantage. In plain English. Okay, I am picking up on a newsletter that's one of my favorites from one of my favorite commentators, Scott Galloway. His point is simple. Wall street stares at Amazon's cloud, but the sleeper story is retail getting cheaper to run because of robots and better software. So his thesis, he's just released his most recent recent market report. He makes predictions every year on what is the top tech company that's going to really dominate in the next year that most people don't think will actually dominate. He's picking Amazon. Now. Amazon is rolling out nearly 40 robot ready warehouses by the end of next year. That means fewer mistakes, faster sorting and lower cost every time you click buy. If roughly a third to Two fifths of US orders move through these buildings by 2030, the annual savings could hit about $10 billion. The stock meanwhile, trades for much less than its own five year average. This is the thing that sort of confuses Scott Galloway. Why he feels it's undervalued and why it could perform so much better in 2026. And Amazon already moves atoms at massive scale. Tens of thousands of trucks and vans, more than 100 planes, more than most prime orders arriving the same or next day. Bottom line, the market sees cloud computing, it's missing retail, getting way more profitable. And I have to confess, I hadn't thought of Amazon that way as well. But their robots are doing the heavy lifting. Is that good for workers or people who wanted a good job in a warehouse or at least a decent paying job at a warehouse? No, but it is good for Amazon shareholders. What's the real message here? Amazon could be the big hit in the stock market in 2026. Too many people just think of them as a cloud company these days and fail to realize how much more profitable their core business of selling stuff and moving it around. But this time with robots is going to be. Let's dig a little bit deeper here. There's also a new book that just about to start by the commentator Tim Wu, where he goes. I've read, I've read excerpts of the book so far where he goes into Amazon and talking about how good it is that extraction, it's extracting our brains, our minds and it is, it is playing us, it's playing me because it's so good at manipulating our laziness. Now I'll admit I'm lazy. And Amazon realizes, hey tj, you could go to a shopping store and take all day and get stuck in traffic and park, stand in line or you could, you could Just go push a buy button and it shows up front door. It's addictive. I buy. Since I've just recently moved into a new house, I buy from Amazon every single day. So I'm a part of the solution for Amazon. I'm a part of the problem for a lot of the world. And when it comes to local stores, mom and pop stores, retail stores, workers in stores who are used to getting a paycheck. So I readily acknowledge I'm a part of the problem. I want to stress now this is not an investment advisory service I'm offering. I'm not telling you to go out and buy stock. But I am looking at a major cultural institution that affects all of us. If you never buy from Amazon, that takes on its own sort of cultural mantle because people are probably always sending you things, oh, I got this here. And they're sending you an Amazon link and you got to be no, no, I don't like Amazon. And you've got to spend time researching. If you do buy from Amazon, it's very much a part of your life. Let's look at some more facts about what's going on with Amazon. Now as I mentioned, nearly 40 robot equipped US warehouses will be opening by the end of the year. It is estimated to save about $4 billion a year. 30 to 40% of US orders use what they call next gen sites by 2030 and that's going to save $10 billion a year. They are getting more and more advanced in, in their use of robots. Now Jeff Bezos has been into robots for a long time. He bought a major robotic company for three fourths of a trillion dollars many years ago and I'm sorry, three quarters of a billion dollars many years ago. And it's finally really paying off because they are getting better and better. Apparently up to 75% of warehouse work is going to be done by robots in 2027. Now this is confusing at first because you think of this. Those of you of a certain age think of danger. Will Robinson from the 1960s show Lost in Space. That's not what these robots look like. Sometimes they just look like giant roombas. There's no arms or anything. But apparently the biggest advances around robots are with fingers and something like a thumb that can pick things up things down and not break things. Because the real advantage of robots, this isn't popular organized labor. It's not popular to you if you work in a warehouse. But robots don't call in sick. Their backs don't get hurt, they don't ask for Workman's comp. They don't ask for vacation, they don't ask for raises, they don't need 16 hours a day off. They work 24 hours a day. So you're never going to have a situation where Jeff Bezos or Andy Jassy, the current CEO of Amazon, is thinking, how can we create the most jobs in a community? That's not their job. Now, that may well be the job of, of political leadership, but it's not the job of a corporate CEO. Now, certainly for the last 30 or 40 years, what most CEOs think of as their job is to deliver shareholder value, to deliver as much value as possible to people who own pieces of the company. You could argue whether they really think, how can I get the biggest bonus for me, Certainly historically there were local businesses, especially if it's family owned, where the CEO is thinking, how can I treat all of our employees like family and grow our community? But sadly, people like that have mostly been bought out, merged out, put out of business, made irrelevant by the Home Depots and the Amazons of the world. And it's just not as simple as saying, don't ever hire a robot or don't make a robot. Always hire people. People deserve jobs and are worthy of respect. Yes, I do want people to have jobs. Yes, yes, people are worthy of respect. But it depends on what side you're on. If you are a schoolteacher and your 401k has broad based index funds and a significant part of your retirement is Amazon, you do want the highest rate of return. So you're not going to have to work when you're retired. You need that pot of money to grow and the robots are doing that. Scott Galloway is, to me, one of the most fascinating voices in the podcasting space. He's also an author who has a new book coming out about problems, specifically of boys and young men in our culture. So every time he does speak and he comes up with these big predictions, it gets a lot of attention. Not just because he is provocative, but because so often he is. In fact, right now, he's another one who does use profanity. He uses profanity, speaking of an earlier story today, and Congresswoman Nancy Mace. He uses profanity constantly on his podcasts, from his speeches where he's paid hundreds of thousands of dollars a year. But I really don't think when he gets into a hotel and checks in in his room isn't ready, he starts cursing or using the F bomb at employees. I think he does it for specific effect so bottom line, Amazon is definitely a mixed bag. We could do entire shows on all the damage it's done and frankly, bad things it's done as far as putting diapers.com out of business and using its monopolistic power and white labeling certain products when it sees its own customers are selling well. There's a lot of bad things that Amazon. You could certainly make the case that for many, many years they had an extraordinarily unfair advantage over physical stores that had to pay taxes. Now typically they do have to pay tax, but there's no mistake about it. When you get right down to it, Amazon is the single greatest company in the entire world when it comes to figuring out how do you get some stuff here? Let's say it's and move it over here and do it as quickly and as cheaply as possible. They are the most brilliant logistics company in the history of the world regardless of how many things you might hate about them. You might hate Jeff Bezos wedding or his Jocelyn Wildenstein looking bride. All that aside, he somehow figured out how to move stuff here to here faster and better than anyone else. And it's addictive. There have been sometimes years where I didn't buy anything that wasn't delivered on Amazon. I simply didn't have the patience to wait a third or a fourth day. And right now I'm really feeling the pain. I've recently bought an eight sleep mattress designed to help you sleep. And you can't buy it through Amazon. Like, okay, I've heard so many good things about how well you can sleep with this eight sleep mattress cover where it adjusts the temperature on each side of the bed so you don't wake up with any kind of night sweats or discomfort. So I've, I purchased it about six weeks ago. I still don't have three of the five parts. They send it to you in different boxes in dribs and drabs. Weeks go by and I'm thinking, my God, how do people live like this? This is barbaric. Waiting weeks and weeks and weeks for stuff to be delivered. I've had another problem just with a bicycle tire, you know, taking 10 days for a bike tire. My biggest problem is a table, a new dining room table to be delivered in my house from Europe. It's taking six weeks for that. I still don't. And it makes me think, wow, why can't everything be on Amazon now? It is a problem for society and culture and commerce if no one can ever, ever buy anything other than through Amazon because It gives them all power. And according to some estimate, Amazon is taking 51% out of every dollar spent on products. And it's making a lot of businesses unprofitable. They sell through Amazon because they feel like they have to sell through Amazon, but they're doing it at a loss or making almost no money because Amazon's charging them this fee and delivery fee and quite often advertising fee, or you get buried and it makes it extraordinarily difficult. So no, while part of me wishes I could buy everything with one click, it's not going to be good. If you believe in free markets, you have to believe in competition. And the big problem now from society standpoint is Amazon just doesn't really have much competition. Yeah, I understand Walmart's more aggressive, but it's not the first place I think of when I want to buy stuff. And if you truly do believe in free market capitalism, it's about competition. Amazon seems to be getting just better and better and better at this, delivering stuff quickly, which is why Scott Galloway believes it is going to do better than any other technology stock next year. So it's something to keep your eye on. Again, I'm not giving you financial advice. Don't sell all of your 401. Take all of your investment portfolio and put it into Amazon. That's not what I'm recommending.