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As I mentioned in a previous post, I have received some mind-blowing info regarding a major online player. That player is Amazon. I should say this… please don’t go out and blow your life savings on Amazon.com stock based solely on this information as it is NOT confirmed and I have absolutely no direct evidence that it’s true. All I have is third party rumors but from someone I consider pretty reliable.

It seems Amazon (Jeff Bezos) isn’t really in the retail business. They are more into the distribution business… or at least that’s what I gather based on this info I’ve come across.

I think it’s no surprise that Mr. Bezos is putting his wealth to use through investing. Apparently, he’s heavily supporting advances in nanotechnology. You’ll never guess why, though.

Tunnels.

Here’s Bezos’ master plan, as far as I can cobble together. First it’s important to understand the key stumbling block to Amazon’s growth. It’s shipping. If he could have his current low overhead, coupled with the brick and mortar presense of Walmart, he’d be in the position to rule the retail space in the USA.

I guess he is of the opinion that nanotechnology will solve this problem.

Nanotechnology is the ability to make microscopic machines do work for you on a microscopic level. Bezos has people working on microscopic machines with the ability to tunnel in the earth. Not in the traditional sense of tunneling, however. Using nanotechnology, you can feasibly let loose billions of little microscopic machines that have the ability to change the molecular structure of dirt to another substance, one with presumably less mass like a gas of some sort or another. So, in effect, these little machines can carve out a tunnel much cheaper and much faster than using a traditional tunneling machine. I’m not sure about the actual technology and how far his people have advanced it, but I would imagine they could get to the point that they could dig a 6 foot round tunnel perhaps a few miles a day. Whereas with today’s manual tunneling technology, you could probably expect to go 1 mile every couple of months or more.

Once the tunnel is void of dirt by turning the dirt into a benign gaseous state, the gas is just pumped out and a concrete machine can come along behind and seal walls of the tunnel using concrete. Depending on how far along the technology gets by the time the tunneling starts, you could even have nanobots creating cement also.

So, why build tunnels?

Imagine 30 years from now when Amazon has a maze of tunnels criss-crossing America where they can get products the size of couches to any location in the USA from any location within hours at a fraction of the cost of traditional shipping methods.

Is the magnitude of that sinking in yet?

The overall goal would be to completely bypass today’s shipping companies (and the enormous cost that each incur on the bottom line) and have an almost direct conduit to every major location in the USA. They could be the Walmart of the future except with a fraction of Walmart’s overhead. (Maintaining 4500 warehouses and millions of employees all over the US is a monumental hit on the bottom line.)

Their long term goal is to have centrally located automated “hubs” where you can pickup your merchandise at your own convenience. Let’s say you order a 40″ flat screen TV from their website at 9am. By the time you get off work, your TV will be waiting for you to pick up at the Amazon hub in your town. Let’s say for this example that all of their TVs are located at their Kansas master facility and you live in Portland, OR. When your order came in, their system would have immediately sent a pick ticket to the Kansas facility where it would automatically be placed on a conveyor belt where it would be taken to the Kansas facility’s tunnel staging area and placed in a pod along with all the other items that are going to Portland, OR for that hour (each location would have specific departure frequencies based on how many items were going there in one day.) The pod would then be loaded (completely automated) and sent down the tunnel to Portland, OR. Moving along at about 300 to 500 mph under the earth from Kansas to Portland, it would arrive in plenty of time for you to pick it up after work and for pretty much NO shipping costs to you.

The Portland tunnel would take all inbound pods to the Portland customer hub, directly. This hub would be completely automated. You go into the facility and type in your customer number and the delivery code that was given to you when you ordered your products and within a minute your TV would come rolling up to you via their automation system. There would be someone there to monitor everything, but for the most part, it’s all automated.

Having only 5 or 10 master facilities spread across the USA would allow Amazon to deliver products to the end consumer cheaper than any other retailer on earth. Because they don’t have to ship the same product to 5000 stores, only to then be inventoried there in hopes that someone buys it all, they can more easily carry just about ANY product.

Stop and think about that. They could essentially carry ANY and all company’s products. Because they could scale up or down depending on the demand. They could extend their “advantage” program (program for small publishers to list their titles on Amazon.com) to ANY item. Say you’re a small business and you want them to carry your custom blankets. You sign up for their all product advantage program and VIOLA, your blankets are listed on their website in a matter of hours. You then promote the hell out of them.

So, let’s say they get an order for 3 blankets, their system sends an automated message to you ordering 3 blankets. You then send the blankets to their master facility that handles blankets. As soon as they hit the facility, they are sent to the appropriate pod staging area depending on the location each is going to and within hours of the blankets being received in their warehouse, the blankets are at their final destination.

They could even configure their local hubs to take IN products from suppliers, bypassing the traditional shippers to AND from their master facilities. So, using the above example. If you, the blanket supplier got an order for 3 blankets from Amazon, you’d go to the local Amazon hub and send the 3 blankets by scanning the label they sent you via email when they ordered the 3 blankets from you, and put them on the conveyor belt separately (each packaged separately.) They would immediately be placed on the next pod going to the master facility that handles blankets. As soon as they hit that facility, they would immediately be redirected to the appropriate pod and sent to the final destination. So, from the time YOU sent it to Amazon to the time it hits the customer, it could be the same day and for a fraction of the cost it would have been using today’s shipping methods.

Bottom line… they would not only OWN the entire supply and distribution chain they would be able to operate it at a fraction the cost of anyone else on earth.

Customer gets their product almost instantly (same day) for a lower price tag (no shipping cost worries) and only one company has your credit card data. It could get to the point that you won’t even buy any of your regular everyday things from anyone else but Amazon because of the security and convenience.

If this system sees the light of the day, Walmart is toast as it stands today. Why would a supplier give Walmart their exclusive business when they could reach even MORE customers and get a better margin AND still have their product priced lower than the price Walmart could charge the end consumer?

Wow!

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4 Comments

  1. […] going to be the single biggest development in business history. Read about Amazon’s alleged tunnel project. […]

  2. Dan, are ytou a fiction novelist? As a financial profesional and business analyst as well as having been trained in the life sciences (materials science, chemistry and medicine)—i.e. what is essentially called nanotechnology today, what you are talking about might make a nice story for the Twilight Zone. The state of nanotechnology is very primative right now and even when it advances to the point that would be required by your tales of fiction, if you think we will be digging holes in the ground to enhance transportation, I don’t know what to tell you without insulting you.

    The one thing you are right about is that Amazon is a distribution company that essentially leverages assets and makes a profit through the efficient distribution and management of these assets, similar to flipping assets for a small profit many times over teh operating cycle.

    According to Dr Richard Smalley, professor of chemistry at Rice U. (and Nobel Prize winner for the synthesis and discovery of whatare known as “buckyballs”, a very significant molecule in the nanotechnology field), nanobots are not feasible. To the less informed reader, this story is perhaps exciting but it is nevertheless pure fiction.

  3. Hi Steve,

    Yes, I can appreciate your opinion. Although, I did say that it was something I had heard from someone else. So, I can’t get credit for the fiction writing. Haha!

    I have to reserve final judgement, however. I think it is ENTIRELY possible to create an nano enzyme (of sorts) that can make tunnelling hundreds of times easier to accomplish. No, I don’t think there will be little robots with little shovels, digging a tunnel. However, I think it’s getting to the point that nanotechnology will allow for the molecular destruction (or at least molecular changing or manipulation) of certain molecules (dirt and rock, for example) and create a softer material through which to tunnel. Imagine spraying nano materials on a wall of rock and dirt and having that wall start to turn soft and sludgy. That’s what I’m referring to.

    I think you’re being a bit too harsh in your assessment, but I’ll attribute that to perhaps interpreting my post a bit differently than I had intended for it to be interpreted.

    Alas, I guess we’ll find out at some point, hey? 🙂

    Thanks for leaving such a well thought out and in particular, “non-inflammatory, non-name calling” post. You must be a conservative. (Congrats if you’re not! You’re in the minority. At least according to my experiences with lefties in my comments, many of which I’ve had to delete because I don’t want my mom to read such filth.)

    Best Wishes,
    Dan

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