Couple things about Amazon Prime Air, as mentioned by CEO Jeff Bezos to Charlie Rose on 60 Minutes:
- This won’t be for free. Expect to pay a premium for the convenience. For example, I pay for Amazon Prime for free shipping on most of my orders (plus a lot of premium online videos).
- This isn’t for everyone. Some customers will use this enough to make sense and be profitable (or at least not be a long-term white elephant). The Prime business model is a good place to start.
- This won’t be for everything. You are certainly limited by weight and size, with 5 pounds being the high side. I can’t speak for everyone, but I usually by several things at a time. Would this mean a fleet of drones?
- This isn’t for everywhere. I’ve heard within 1-hour of distribution centers. Which means huge swaths of the country will not be served.
- It’s a little creepy.
- Cost-Benefit. 1 hour of my time at $50k/year is $24 plus 30-miles of driving at $0.50/mile. Figure $40 premium per order. At a certain point it might be cheaper to drive. Or Amazon needs to figure out what items, what distances, with what frequency and to what customers would this make sense.
- Regulatory – the FAA is going to have trouble making rules that make sense. The first drone that falls on a school or grandma is going to be a nightmare.
- Plenty of smart people have pointed out that this was news-as-marketing, with a pre-Cyber Monday announcement meaning Amazon led the way in all the morning news. This is the most likely explanation.
- Bezos is a strategic (and design/experience-centric) thinker. I take that he rightly sees the need for 1) immediate gratification with your purchase as a reward and satificer as a necessary part of consumer loyalty and 2) looking at ground and air transportation as the next pain-point for change (think UPS, USPS, and FedEx).
- None of Amazon’s competition has the guts, resources, or patience to try anything this ambitious. If anyone could, it would be Amazon’s service providers, in terms of UPS, USPS, and FedEx. Come to think of it, there’s a place in this model for autonomous cars as well.
- Amazon hasn’t made a big deal about its locker program. I can definitely see drop shipments to a locker being more viable than a drone at your front door.
- This should also give people pause as to the threat of robots taking our jobs (not kidding). Your average government mailman or private sector delivery person makes a good living in exchange for his or her labor. This is yet another assault on middle class jobs.