Amazon and the future of drone delivery

Photo credit: James Strong.

Since its founding in 1994, Amazon has been massively disrupting the retail world. Over the years, they’ve increased their delivery speed to the point where they now offer free two-day shipping with Amazon Prime. They are also beginning to push their on-call delivery service, Prime Now, which is currently available in 20 metro areas.

Amazon’s fastest order delivered to date was a four-pack of Starbucks vanilla Frappuccino to a customer in Miami. The delivery was made in under 10 minutes.

For several years now, Amazon has indicated that they intend to use drones to deliver products. Back in 2013, founder, Jeff Bezos, said “One day, Prime Air vehicles will be as normal as seeing mail trucks on the road today.”

Here’s the original Prime Air promo video:

But even though Amazon has been discussing drone delivery for over three years now, they still have not put the program into action.

What will the future of drone delivery look like for Amazon? It’s hard to know precisely because the company is notoriously secretive. However, we can make some educated guesses based on the actions of the company, the current state of drone use in the United States, and general market conditions.

Here’s what we currently know and where we think things may be headed.

Amazon is rapidly expanding its delivery methods

Amazon clearly has plans to massively expand their delivery operations, and drones are only a small part of those plans.

According to the Wall Street Journal’s 2015 report, Amazon is making an “effort to take more control of its shipping processes” through a move to use branded semi-trucks to ship inventory.

Additionally, Amazon is using a crowdsourced delivery method and is building a fleet of airplanes to supplement the standard delivery options they currently use. Clearly, they are intent on using all the resources at their disposal to significantly decrease the time between an order and the package actually being delivered.

Some think that Amazon is trying to completely replace the third-party companies, such as UPS and FedEx, that it uses for delivery.

This probably isn’t the case. As the New York Times reports, “[Amazon’s] not trying to replace third-party shippers. Instead, over the next few years, Amazon wants to add as much capacity to its operations as possible, and rather than replace partners like UPS and FedEx, it is spending boatloads on planes, trucks, crowdsourcing, and other novel delivery services to add to its overall capacity and efficiency.”

Wal-Mart recently purchased Amazon competitor, Jet.com, for US$3.3 billion. This ratcheted up the online selling competition between Amazon and Wal-Mart. By increasing their delivery speed, Amazon can gain a competitive advantage over ecommerce rivals.

Amazon must clear regulatory hurdles before using drones

Amazon is testing a variety of drones in a variety of locations

Initial rollouts will probably be in medium to low-density areas

Conclusion