Why Amazon's Drone Delivery Plan is Good Blue-Sky Thinking

Airborne package transport may seem like a wacky idea, but Jeff Bezos has a good track record with futuristic projects

Written by James Cowan

Two years have passed since Amazon declared its intention to make deliveries with airborne drones. Yet a small question lingers: They’re kidding, right? Every tech billionaire has a pet project. Elon Musk wants a world where we shoot through pneumatic tubes; the Google boys tried to build a space elevator. But only Amazon CEO Jeff Bezos casts his sci-fi vision as an imminent reality.

A promotional video released over American Thanksgiving promises 30-minute drone delivery in the “not-too-distant future.” Starring Top Gear‘s Jeremy Clarkson, the two-minute clip showcases a new model that rises like a helicopter but cruises like a plane.

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Yet for all the hype since the drones were first unveiled, they went unmentioned in Amazon’s 2014 annual report, making them seem like the equivalent of a concept car—built for publicity but never put into production.

Skeptics argue Amazon’s drones aren’t viable as anything other than a marketing gimmick. The Federal Aviation Administration has been glacial in deciding whether it will permit low-level drone use in the United States.

Even if regulators approve, a delivery by drone could cost up to US$200, according to an estimate published in the MIT Technology Review. That’s a steep price hike from the US$7.99 currently charged by Amazon for one-hour delivery in seven major American cities.

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But here’s the difference between visionary tech billionaires and the rest of us: They see potential in the preposterous. Push past both the legitimate challenges and knee-jerk, this-will-never-work reactions and Bezos’s wacky project transforms into something that benefits Amazon in the short, medium and distant terms.

Sure, it’s currently a publicity tool—but a highly effective one. Bezos unveiled the drone program in 2013 during an episode of “60 Minutes” that aired on the weekend before Cyber Monday, the online equivalent of Black Friday. Two years later, the Clarkson-hosted promo video debuted. The timing meant that every media outlet from the Wall Street Journal to Entertainment Weekly highlighted the company as it headed into one of its busiest days.

But while the public’s imagination is captured by the drones’ novelty, Amazon is quickly iterating toward a viable product. In five months last year, it moved through nine different drone models.

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All of this work goes toward solving one of the biggest challenges for Amazon—how to most efficiently move products from its warehouse to your door. For all its logistical prowess, the company is still dependent on courier companies and postal services to cover the “last mile” to a customer’s home. It has launched a startling array of pilot projects to bridge that gap, from starting its own shipping network to creating Flex, an Uber-like service that pays people to deliver packages using their own cars.

Amazon would very much like to stop relying on courier companies—or, better yet, replace them. If Bezos can build a better delivery service, it can easily be sold to others. He has already demonstrated a knack for pushing the company’s existing expertise in new directions. A decade ago, he took Amazon’s computing skill and built Amazon Web Services, which today provides cloud utilities to Netflix, Spotify and the CIA.

Amazon Web Services usage grew by 90% in the fourth quarter of 2014 compared with a year earlier. It took time, but the market eventually aligned with Amazon’s vision of the future. With drones, it could happen again.

James Cowan is the editor-in-chief of Canadian Business. This article is from the January 2016 issue of Canadian BusinessSubscribe now!


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