Don’t Hold Your Breath for Amazon Prime-Air Drone Delivery

60 Minutes had a segment tonight on Amazon.com ($AMZN: no positions).   There was an interesting interview with CEO Jeff Bezos, and then Bezos’s “bombshell” – the PrimeAir drone delivery concept that Amazon is working on.   Before we get to the sublime, I want to focus on the few interesting tidbits from the interview.

First, they take a look inside an Amazon “fulfillment center”

“A 1.2 million square foot distribution center, the size of more than 20 football fields, gearing up for the holiday shopping season.

There are 96 of these warehouses worldwide, what Amazon calls fulfillment centers. Tomorrow, on what is known as Cyber Monday, it’s expected that more than 300 items a second will be ordered on Amazon.”

Amazon VP Dave Clark takes Charlie Rose on a tour of the stacks, and shows how items are stacked based on size to maximize number of items stocked.   Clark adds the money line:

“Anything you want on, on Earth you’re gonna get from us.”

I, as an Amazon consumer, have said as much on multiple occasions while “arguing” with $AMZN shorts (note: I have never owned the stock, so I’m not saying it’s cheap…) – you will ultimately be able to buy *everything* on Amazon.com.   I believe that I will buy my electricity from Amazon one day.

Clark and Rose talk about how orders are fulfilled in the center, and then Bezos talks a bit about same day grocery delivery, Amazon Web Services and customer loyalty before Rose asks him about Amazon using their pricing power to muscle out competition.   Bezos responds with some more money lines:

“The Internet is disrupting every media industry, Charlie, you know, people can complain about that, but complaining is not a strategy. And Amazon is not happening to book selling, the future is happening to book selling.”

Eventually, Bezos lets Charlie Rose in on a new delivery concept Amazon is working on:  PrimeAir – drones.   These little drone-copters can carry a package weighing up to 5lbs for up to 10 miles.   Bezos notes that the weight limit covers 86% of the items they deliver, and that this is just and R&D project right now, with the earliest possible FAA approval in 2015, adding:

“My guess is that’s, that’s probably a little optimistic. But could it be, you know, four, five years? I think so. It will work, and it will happen, and it’s gonna be a lot of fun.”

Now, some background on me, for new readers:   I live in rural New Hampshire.   We’re only 25 minutes from Target/Lowes/HomeDepot/WalMart/Sam’sClub, but my wife and I order almost everything we buy from Amazon.com or one of their sub-companies (Soap.com, Zappos, etc).    A quick scan of my Amazon account shows that I’ve placed 32 orders this year, and my wife has probably placed just as many.   It’s not unusual for Fed-Ex and UPS to come to my house on the same day with Amazon packages.   Sometimes the results are even weirder than I’d expect.   I have bought flashlights, socks, 2 stroke mixing oil, ladders, chicken wire, cereal, electric smokers, power tools, and a plethora of other items from Amazon.   When I need something, I don’t think “Oh, I’ll drive to Lowed/Target/Home Depot to get it,” – I go to Amazon.com.   As consumers, we love Amazon.com.

But watching Bezos’s drone demo, I didn’t even have 2 seconds of “oh man, this is a cool idea” thoughts before I blurted out to my wife: “This is moronic.   There is no way this is going to happen.”

Who is the target audience here?   It’s not feasible for big cities, and my first thought was “people will shoot these things down or steal them.”   Then you add in the 10 mile restraint, and it seems like the whole idea is more of a word-of-mouth advertising bit than a potential reality.    Bezos mentioned that “in urban areas, you could cover very significant portions of the population.”   I don’t get it.   Look – tell me how this is going to function in New York City – convince me.  No friggin’ way.   Tell me where it works – for the people living around the Amazon fulfillment centers?     In densely packed low-crime suburban neighborhoods that are also located within range of Amazon fulfillment centers?

To the Believers out there: convince me.

Remember how in many of the movies they make about “The Future” there are 3 dimensional highways with cars traveling on rails or air?   That isn’t happening in my lifetime, and I’m not holding my breath for Amazon Same Day Delivery Drones either.    I am pretty confident that I will buy my electricity from Amazon before I get a drone delivery from them.

Mrs. Dynamite noted: “The dogs go crazy when Fed-Ex comes… just imagine how they’ll react to the Drones!”

Anyway, Bezos closes the interview with a few more interesting comments on “disruption.”

With the drones possibly taking flight in the not too distant future, Amazon is raising the stakes in the race for faster delivery. Jeff Bezos believes the company has no choice.

Jeff Bezos: Companies have short life spans Charlie. And Amazon will be disrupted one day.

Charlie Rose: And you worry about that?

Jeff Bezos: I don’t worry about it ’cause I know it’s inevitable. Companies come and go. And the companies that are, you know, the shiniest and most important of any era, you wait a few decades and they’re gone.

Charlie Rose: And your job is to make sure that you delay that date?

Jeff Bezos: I would love for it to be after I’m dead.

Apparently, some wiser than me were able to predict this move from Amazon – although it seems that at least one of these guesses may have been tongue-in-cheek:

@Bradloncar and @elidourado each nailed the “surprise” on 60 Minutes

amzn_bradloncaamzn_elidourado

Full Video:

60 Minutes Segment on Amazon.com, PrimeAir

Amazon.com – A Logistics Story

I Heart Amazon.Com

Eff You Brick And Mortar

-KD

 

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