Can Santa Compete With Amazon?

Can Santa Compete With Amazon?

santa-warehouse2Santa Claus is the world’s largest manufacturer and distributor of presents for good girls and boys around the world.

If you assume 2 billion children, 1 toy each, 364 workdays (Christmas day through the following December 23rd – then packing the sleigh on Christmas Eve), 16 hour days and each elf can make 4 toys per hour, you need around 85,851 elves. That’s quite a workshop.

Headquartered in the North Pole, Santa Claus and his team of helpers are responsible for delivering all Christmas presents on-time, every time – within a window of just one day a year. Santa’s main distribution center in the North Pole is a phenomenal sight. At over 3,000,000 square feet, it’s one of the world’s largest facilities.

Back in 2010, Santa Claus recognized that the world was changing and his operations were falling behind. The toys his customers demanded were becoming ever more complex, requiring work to be outsourced to specialists. Fewer elves of working age were limiting his production capabilities, while a growing world population stretched even his magic powers to deliver within a 24-hour period. All the while, a massively growing Amazon and its membership service, Amazon Prime, has been growing by tens of millions of members getting products delivered to their door in two days time. Some members even have Prime Day getting their packages delivered within 24 hours. Currently Amazon has more than 300 million users using its platform plus it’s growing at a healthy rate.
Could Amazon’s operations compete with Santa’s Workshop, delivering billions of toys in just one night? We will discuss the possibilities below.

Elusive Elves vs. Random Shelves

How might the elves in Santa’s Workshop operate? This question depends on understanding the capabilities of the elves and how they differ from human workers. References to the word alfar, or elf, first appeared in the Icelandic record in Viking-era poems that date back to around 1000 AD. In one 1998 survey, 54.4 percent of Icelanders said they believed in the existence of elves. It is also their belief that elves are elusive creatures that can cause mischief.

In August 2015, an Icelandic construction site was interrupted by elfin influences. When construction workers were clearing a road blocked by landslide debris, they accidentally buried the “Elfin Lady Stone”, a sacred elf site. In 2012, this stone was declared an artifact and protected under a law which protects Iceland’s elfin heritage. This mistake was blamed on a series of subsequent events. After the landslide was cleared, the road that was rescued was then flooded and a colleague in the area was injured. Next, machinery began to fail and a journalist covering the story fell into a mud pit and had to be rescued. Sveinn Zóphóníasson (one of the owners of the construction firm) said, “I never saw anything like it. I’ve seen mudslides and flooding before but nothing like this.” A year later, the “Elfin Lady Stone” was finally dug up and power washed in the hopes of pleasing the elves in the area. Elves are swift, elusive and tireless working creatures. Santa is using thousands of these workers every day, and yet, Amazon is unaided by magical creatures, but is seemingly able to compete with Santa in distributing presents all over the world for Christmas. How is Amazon improving its operations so quickly against Santa’s Workshop?

kiva_amazonAmazon’s warehouses are massive, highly organized, and full of people running around collecting products for orders while being helped by robots. These are the main hubs that handle millions of products and over a billion orders every year shipping out on a fleet of trucks. For the more local and much smaller Amazon Prime Now warehouses, things work a bit differently. You’d expect the Prime Now warehouses to be even more organized than the main Amazon hubs because time is always going to be a problem (two day shipping). So it may surprise you to know that Prime Now products are stored completely randomly on the shelves. Why randomly? Because it’s much more efficient that way believe it or not. Every item is scanned and its location logged on computer. Amazon then uses software to scan orders, look up where all the items are stored on the shelves, and plot the most efficient and fastest route for a worker to take to collect them all.

Ultimately, the random placement doesn’t matter as long as the scanning happens. It also speeds up the restocking of the shelves as workers don’t need to worry where products are placed. Other reasons for random placement would be reduction of collisions: if two or more workers have to pick the same item from the same shelf, one has to wait for the other to finish first – waiting is inefficient. Also, orders are random: how could you optimally stock items so that orders are efficiently filled? You can’t. By randomly storing items, you can let the computer figure out the shortest path to collect all the items. Ordering things makes it easier for humans who have difficulty keeping millions of things straight in their head – but (usually) can figure out how to find things if they are sorted alphabetically or categorically.


Naughty Lists and Data Storage

Surely, the elves have adopted data management software and cloud servers for the billions of toy lists they receive every year. Not to mention, the CRM software and computing power needed to automate Nice lists and Naughty lists. Santa’s Workshop must undoubtedly have a major advantage to storing data over Amazon, right? The secret is in the landscape. Where is Santa’s Workshop located? The North Pole. Data centers consume up to 1.5 percent of all the electricity in the world. Imagine the air conditioning costs to keep massive data centers cool enough. Santa keeps his electricity costs down by building his data centers right in the North Pole. Even facebook-data-centreFacebook built a data center in the Arctic Circle.

Of all the places where Amazon operates data centers, northern Virginia is one of the most significant, in part because it’s where AWS (Amazon Web Services) first set up shop in 2006. Today, up to 70 percent of Internet traffic worldwide travels through this region. An unfathomable amount of that traffic is from AWS. Amazon doesn’t release exact numbers at to just how much of the global Internet currently sits atop its infrastructure. In 2012, network-intelligence startup DeepField estimated that on average, one-third of all daily Internet usage accesses a site running on AWS. Over the last four years, that percentage has most likely only increased.

Amazon Web Services also builds its own electric substations, which is a major undertaking considering that each one requires between 50 and 100 megawatts to really be efficient. The equipment can be pretty expensive (although not exceedingly high when spread across so many services) and the company even has firmware engineers whose job it is to rewrite the archaic code that normally runs on the switchgear designed to control the flow of power to electricity infrastructure.

AWS recently announced Snowmobile, a truck that houses a container that can store up to 100 petabytes of data. Massive data users can contract Amazon to move exabytes of data to the cloud using the new tricked-out trucks. Snowmobile attaches directly to your data center with power and network fibre to move critical information to AWS, even when its size is insurmountable for mere mortals. Designed to address data challenges for companies dealing with large film vaults and troves of satellite imagery, the truck consumes a whopping 350 KW of AC power. All this power fuels a switch that can handle one terabit of data per-second across multiple 40gbps connections. This means a Snowmobile can be filled to the brim in roughly 10 days. After all is said and done, the truck is taken back to AWS where its contents are put in the cloud.


Shipping & Delivery

There are 1.6 billion households in the world. According to a PEW Study, Santa visits 31% of households in any given year. Santa has 31 hours of Christmas to work with, thanks to the different time zones and the rotation of the earth, assuming he travels east to west. Since the Earth has about 25 million square miles of habitable land, the average distance between any two households is approximately 0.138 miles. This works out to delivering presents to right around 500 million households with about 223 microseconds on average to deliver to each house. To move the mean distance from house-to-house, Santa travels at around 6,400 miles-per-hour. A conventional reindeer can run, a top speed of 15 miles per hour.

Amazon has left a trail of clues suggesting that it is radically altering how it delivers goods. Among other moves, it has set up its own fleet of trucks; introduced an Uber-like crowdsourced delivery service; built many robot-powered warehouses; and continued to invest in a far-out plan to use drones for delivery. One of more than 40 Amazon-branded Boeing 767 airplanes are planned to roll out. These moves have fueled speculation that Amazon is trying to replace the third-party shipping companies it now relies on — including UPS, FedEx and the United States Postal Service — with its homegrown delivery service. Its logistics investments have also fed the general theory that Amazon has become essentially unbeatable in American e-commerce.

rocketThe company’s drone program, which many in the tech press dismissed as a marketing gimmick when CEO Jeff Bezos unveiled it on “60 Minutes” in 2013, is central to Amazon’s shipping future; drones could be combined with warehouses manned by robots and trucks that drive themselves to unlock a new autonomous future for Amazon. It envisions drones being able to deliver packages up to five pounds in weight, which account for 80 to 90 percent of its deliveries. There are hurdles to realizing this vision. Drone delivery in the United States faces an uncertain regulatory future, and there are myriad technical and social problems to iron out.

When not at the helm of Amazon, Jeff Bezos spends his free time as the founder of Blue Origin, an aerospace company trying to drastically reduce the cost of spaceflight with reusable rockets. Perhaps Bezos has some master plan to connect both Blue Origin and Amazon? Rockets might be the best chance that Amazon has to match Santa.

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