I've heard that diapers.com's warehouses are fully automated. If this isn't already how amazon's warehouses are set up, is this infrastructure (and the know-how to reproduce it) part of the reason behind the acquisition?
From what I read, and from what I know personally, being able to take an arbitrary shopping cart of items, and select the most efficient box is a huge advantage. You can absolutely improve your margins by trimming your shipping costs to a minimum. Although the article doesn't mention it, I suspect UPS is doing most of their carriage. Anyone know for sure ?
Yes. Their warehouses use a Kiva Systems setup, i.e. they have hundreds of little orange robots that run around and lift & carry shelves. Though an ad, this gives a rather good idea: http://www.youtube.com/watch?v=6zXOW6v0c8s