Amazon is testing internet-connected devices that can allow customers to order household products by pressing a single button.
According to Reuters, the retail giant will also be working on wearable tech products.
Amazon is planning to boost the number of staff at its Lab126 division by 27 per cent over the next five years.
According to the sources, Amazon is testing a simple Wi-Fi device that can be placed in the kitchen or a cupboard and used to order products like detergent by pressing a single button.
Amazon spokeswoman Kinley Pearsall stated: "We will continue to invent and create new features, services and products, and to support this innovation. Lab126 is also growing very quickly."
Lab126 is responsible for products such as the Kindle e-reader and the Fire smartphone.
The division plans to have at least 3,757 full-time employees by 2019.
The sources also said that the smart home products could open up a new front in Amazon’s war again Google and Apple.
Earlier this year Google acquired smart thermostat maker Nest Labs, and in June Apple announced plans for its own smart home framework called HomeKit.