38 Comments

Summary:

Amazon is measured when it comes to revealing its future plans and is reticent to share details. And when it does, it does so with its own ends in mind. That begs the question: why did Jeff Bezos pre-announce Amazon drone delivery so early?

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We live in a shock-and-awe media landscape. Jeff Bezos, the mastermind behind Amazon, did precisely that when he shared plans for a drone-based delivery service that will at some point in the future start bringing packages to your home in about 30 minutes. It was a masterful video demo — shared with 60 Minutes’ Charlie Rose, who obviously was so amazed by the video that he forgot to ask a few important questions.

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My takeaway from the video was the following:

  • It was less about drones and more about the growing importance of algorithm-augmented retail.
  • It is also a pretty broad swipe at all local retail, especially big box retailers such as Walmart, Kmart and Target. Those other guys are fighting to get their services web and mobile ready, while Amazon is fine-tuning what matters most in digital commerce: supply chain and speed of delivery. Amazon is optimizing its supply chain to go from beyond delivery on the same day to within a few hours, with ultimate ambition of being less than an hour.
  • It is thumbing Google and eBay in the face, saying, go ahead, experiment all you want with same day delivery. Retail is Amazon’s core business and it is doing whatever it takes to get even more efficient at it.
  • I wouldn’t be surprised if it starts using an Uber-like service to start implementing a version of this pretty quickly. Even WalMart is experimenting with crowdsourcing delivery of packages and it makes most logical sense.
  • It is a good way to push UPS, FedEx and USPS to come up with new delivery models befitting this new changed retail and consumption landscape.

Having followed Amazon for nearly 15 years — the first five years as a skeptic, then as a believer — I am always impressed by Bezos’ audacity and desire to constantly push the envelope. He sees the importance of things & trends long before everyone else — especially if those trends help Amazon sell more things in a faster, cheaper way. And in nearly 15 years of following the company, I can say it is fairly cautious (and quite secretive) when it comes to revealing its future plans. It is reticent to share details and when it does, much like Apple, it shares its own version of truth and data.

Which leads me to ask the question: Why did Bezos announce Amazon’s plans now, especially when everyone knows that the legislative issues around commercial deployments of drones are as matted and entangled as the hair of someone who walked across Kalahari? Even Bezos, in his chat with Charlie Rose, pointed out that it will be a few years before the rules are modified. (Related reading: A new Babylon and rise of the tech tycoon.)

There are many theories — for instance, this is a way to put pressure on the FAA (very plausible.) There are many legal issues around drones, and I think being pre-emptive isn’t such a bad strategy. Others might think that Amazon is trying to get a lot more holiday mindshare (not that it needs it) or just that it wants to divert attention from some possible future bad news? What is your take?

PS: Lot of responses to this on my Twitter feed. Here are some of them:

  1. Because Google is too, but they haven’t announced it yet. They want to be the first (of course they do…) because hey, look at all the free marketing they are getting. http://www.amongtech.com/google-also-working-on-drone-delivery-system/

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  2. Floris VanCauwelaert Monday, December 2, 2013

    To be first?

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  3. Amazon’s free cash-flow is on the decline since last many quarters. I think this is a way to signal to investors that it is a company of the future and that they can ignore short term numbers.

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  4. Rags Srinivasan Monday, December 2, 2013

    Because it is a head fake. He wants competition ti focus on the “how” and not the real customer need he is addressing – “delivering packages within 30 minute window”. That is a real bigger threat to retailers. If the competition focused only on drones they will end up focusing on how to design best quarter inch drill while amazon is really delivering them the best quarter inch holes.

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    1. I agree with you in theory on how they are targeting the 30-minute or less as yardstick for delivery of goods and retailers need to be worried. I think it makes sense for them to be aiming towards that goal.

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  5. Delivery within 30 minutes? Not unless they produce about as many drones as there are orders made in a 30 minute window (I’m guessing millions) and have a way of recharging them all simultaneously. Or unless they invent a way of carrying more parcels at once and hope that there are a lot of customers on a 30 minutes flight route/window.

    Also, I suspect these would be fairly susceptible to being brought down, either maliciously or simply by colliding with undetected/unmapped hazards such as cables, foliage, birds, etc. Seems like no more than a marketing exercise to me. It’s certainly not a practical way to deliver packages.

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  6. Jacob E. Dawson Monday, December 2, 2013

    Maybe because today is Cyber Monday and Amazon’s brand name is now flying around the net more than ever?

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    1. Excellent point Jacob, but still it was on 60 minutes so I am assuming it is not just a cheap PR stunt and instead is a bigger PR stunt ;-)

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  7. Arthur Simiyu Monday, December 2, 2013

    To shift attention from the bad press they are getting about the working conditions in their centers to this new “cool” thing. Drones!

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  8. Ouriel Ohayon Monday, December 2, 2013

    Om i have a simple take: he needed to have a massive “Free ad campaign” for CyberMonday…and by announcing something cool he got the WHOLE WEB to talk about Amazon for free. JUST IN TIME for Cybermonday

    Well done amazon. You just save 20m USD in marketing spend

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    1. Fair enough. :-)

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  9. FAA pressure and trying to reduce the stigma of drones. Many Americans hear drones and immediately think NSA spying or CIA Reapers.

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  10. PR. Only Barnum and Bailey exceed Bezos’ audacity.

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