On 60 Minutes last night, Amazon’s tireless founder, Jeff Bezos, introduced an R&D project that could reshape the delivery of their products: Amazon Prime Air. Though some years off and still in early-stage development, Amazon is clearly trying to attack one of their challenges: how to get products to shoppers sooner and cheaper.
Using “octocopters” – I suppose “drones” sounds too militaristic and menacing – Amazon envisions moving products to shoppers within a ten-mile radius of an Amazon fulfillment center within 30 minutes of order placement. Here’s their video promoting the idea: http://www.youtube.com/watch?v=98BIu9dpwHU. Pretty cool idea, eh?
Such a solution would theoretically allow Amazon to dramatically reduce logistical costs, one of their largest cost drivers. It’s visionary and just a little bit crazy. Of course, people said the same thing of Fred Smith when he birthed Federal Express. And, like FedEx that had government contracts moving checks for the banking system to underwrite the cost of rolling out a delivery system to business and individual customers, Amazon has their existing book of business that they can use to support this move.
One of my consistent beliefs has been that Amazon won’t kill retail in part because their logistics model requires someone bearing the last-mile cost of delivery. Today, YOU the shopper are the final mile delivery agent and you largely ignore your cost of cartage. If Amazon overcomes that hurdle, they become even more formidable. It still doesn’t eliminate some of the other advantages that retailers have, e.g., touch/smell/taste before committing to a purchase, social aspect of shopping, selection curation, but it’s a fascinating move.
Amazon has prided itself on experimenting and disrupting markets in the service of superior customer value. Octocopters may or may not “fly” at the end of the day but you have to love their chutzpah and envelope-pushing behavior. George Jetson would be right at home at Amazon.
Posted on 12/1/2013 at 7:00:00 PM