If you owned a company that made $61 Billion in revenue, and were planning to unveil the future of automated cargo delivery, you'd probably hold a much-hyped press event to complement the importance of whatever innovation you were hawking. Amazon founder Jeff Bezos, on the contrary, used a segment on the CBS show '60 Minutes' to announce Amazon’s new flagship delivery system, Amazon Prime Air.
Currently under experimentation, the service would utilize remote-controlled drones to deliver packages to customers. The machines, which are rather small, would be capable of carrying objects of up to 5 lbs within a 10-20 km radius of an Amazon distribution center. This would mean 30 minute deliveries – from the time of purchase – of products for customers, and a huge budgetary savings for Amazon. For a company that has still never turned a significant profit, that can only be a good thing.
This futuristic vision of having items delivered to your doorstep at the click of a button does come with a slight catch.
Amazon will require the Federal Aviation Administration to approve the project, before prepping its unmanned octocopters for lift-off. Amazon estimates that its vision of drone delivery will turn into reality in"4 to 5 years." If that estimation is accurate, one can't help but wonder — "Why did Amazon pre-announce the service by half a decade?"
Marketing and Validation
With over 225 Million customers, marketing and validation is one possible reason for this early announcement. Crunching the numbers behind this announcement shows that Amazon got an estimated $3 million worth of PR, instantly becoming a topic of conversation with all major media outlets, and by extension in most households.
Business Insider estimates that "60 Minutes" devoted more than 15 minutes to covering the Amazon story. For context, a 30-second spot during the 7 p.m. show usually costs advertisers just over $100,000. All in all, not a bad savings for the company’s advertising department.
More interesting than the advertising angle is the blogosphere rumor that Amazon pre-announced this service to get UPS — its biggest rival in shipping and delivery — to lobby on behalf of drone delivery. Only days after the announcement of Amazon Prime Air, a company spokesman from UPS said in an interview with The Verge
"The commercial use of drones is an interesting technology and we’ll continue to evaluate it. UPS invests more in technology than any other company in the delivery business, and we’re always planning for the future."
Ultimately, unless there is a significant policy reform, Amazon’s Prime Air service won’t be able to get off the ground. The FAA has approved the use of drones for government agencies, issuing about 1,400 permits over the past several years, but private firms are still not permitted to launch drone services in civilian air space, owing to safety and privacy concerns. Civilian air space is expected to be opened up to private drone services by 2015.
If Amazon can get its rivals interested in investing in development of their own drone delivery systems, it will have established a powerful lobby that it can use to its advantage in persuading the authorities to expedite the process of policy reform.
Even FedEx founder Fred Smith says that they'd like to switch their fleet to UAVs as soon as possible, but that they would have to wait for the FAA, which has a difficult road ahead in integrating drones into a privacy-concerned and cautious society.
Apart from this, Amazon also hopes to have sorted out technical issues pertaining UAV delivery. Ironing out kinks with problems like obstacle avoidance, power sourcing for the drones, and safety of the package and the drone itself, will have to be the main focus of Amazon leading into 2015.
The World of Tomorrow
Lurking in the background all the while is the risk of the project being scrapped. Even under the FAA’s proposed new guidelines, drones would be required to have dedicated pilots. Amazon, however, wants its drones to operate semi-autonomously, flying to and from programmed GPS points with little hands-on oversight.
Prime Air will be a huge leap forward, if executed well, in making eCommerce stores future-ready. Amazon is at the heart of an ever-growing demand for faster and cheaper delivery of packages. Last Christmas, in preparation for Cyber Monday, Amazon employed thousands of seasonal employees to sort and deliver millions of packages in time for the festive season. If its drone service comes into play, the process could be made much faster and more efficient
This project is as important to Amazon as it is to its customers. Amazon is expected to charge an annual fee for subscription to the service, and will want to make it available at the earliest date possible.
That's why Amazon announced the drones so early. Build some buzz, get some politically-minded support, and all the while keep marching at full speed towards the ultimate vision: shipping everything, to everyone- now in 30 minutes or less.
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