Yesterday, Amazon announced its very own drone program:
John Aziz is excited:
Instead of having to get in your car and go to the store, or ordering something online and waiting a couple days or more for an item to be delivered, people will be able to receive many purchases almost immediately. That isn’t just a useful convenience for the books, batteries, cables, and gadgets that Amazon is known for selling. This kind of system could be used to quickly deliver things like medicine, hot or cold food, or even toilet paper to the elderly or disabled who can’t easily travel. There is potentially a huge social good in home delivery by commercial drone.
Cowen imagines what the drones could change:
Let’s say 30-minute drone delivery to your home were legal, well-run, and, for purposes of argument, free or done at very low cost. You would buy smaller size packages and keep smaller libraries at home and in your office. Bookshelf space would be freed up, you would cook more with freshly ground spices, the physical world would stand a better chance of competing with the rapid-delivery virtual world, and Amazon Kindles would decline in value.
Ed Morrissey is skeptical about the service:
First, just how many orders are delivered within 30 minutes drone flight of a fulfillment center? I live in a top 20 metropolitan center, and my Amazon orders almost all come from somewhere else via UPS. Drones avoid traffic but don’t travel all that much faster than cars do, so a 30-minute radius is not going to be far from a warehouse. Operating a drone air force for such a small slice of the market doesn’t sound like a brilliant financial move, not even for a man who just bought the Washington Post. (Maybe drone delivery of the morning edition makes some sense, though.)
And that’s just the customer end. If this takes place on any scale, the FAA would have fits over the air traffic.
And the drone service can’t launch until FAA regulations are rewritten. Noreen Malone hopes it never gets off the ground:
It’s possible, I suppose, that getting airspace regulated for more and more drones will be a thing we’ll want, or maybe the monitoring required will result in technological leaps and important digital investments by the FAA. But the drones look loud and annoying to me. And what they definitely don’t do is place pressure on the government from a big American company to improve the country’s underlying transportation structure, because the drones say that Amazon is willing to go around that problem.
Yglesias views drones as a danger to Amazon:
On a business level, I think the interesting thing here is not so much the opportunity for Amazon as the threat. Suppose some robotics firm somewhere develops quadrotor drones that can reliably execute parcel delivery missions over the relevant range for a metropolitan area, and the product becomes broadly commercially available. Amazon would be facing a pretty major disaster. Suddenly every Walmart and Target and Macy’s in America would be equipped with a small fleet of drones, and all the hard work Amazon’s done over the past 15 years to be the leader in online ordering and fulfillment would be for naught.
Joshua Gans disagrees:
The first issue is whether this means Amazon will have serious competition. That seems unlikely. The drone mechanism only gets you to the last mile. The goods still have to get to the distribution centre. That is something Amazon has a lock on. Then again, other firms such as Walmart have distribution systems too. So it seems to me that you would need to leverage that. This could, of course, make every local retailer into a drone delivery point. My point here is that Amazon will have no more competition than it already has for what it is good at — getting goods close to consumers and relying on generic delivery from that point. If drones become part of that system, Amazon’s competitive advantage doesn’t change.
Brian Barrett sees this as a marketing stunt. Brad Stone is on the same page:
The aerial drone is actually the perfect vehicle—not for delivering packages, but for evoking Amazon’s indomitable spirit of innovation. Many customers this holiday season are considering the character of the companies where they spend their hard-earned dollars. Amazon would rather customers consider the new products and inventions coming down the pipeline and not the ramifications of its ever-accelerating, increasingly disruptive business model.
The Dish 