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Amazon's UAV image

Viewpoint: Amazon’s Dream Machines

December, 2013

Amazon’s announcement this week that it is considering using drones to deliver relatively small and light-weight packages may be considered bold strategic thinking.
However, even if we choose to overlook the intentional or unintentional publicity stunt, the significant legislative, technical, commercial, logistics and privacy implications amount to a very low probability of success for drones (or the politically correct term: Unmanned Aerial Vehicles – UAVs) operating in populous urban areas.

Firstly, the disruptive nature of UAVs and the psychological threat that they present cannot be readily overlooked by legislators and citizen rights groups.

Moreover, the potential return on investment from setting up and operating UAV assisted delivery centres in rural or less densely populated areas, whilst feasible, would not merit the (currently) high levels of investment that would be necessary in goods handling, inventory holding and distribution centres for a 10-mile radius operation. Hence, a compelling business case is unlikely to materialise any time soon.

Amazon’s case for a ‘greener’ method of delivery also becomes less convincing when we consider the 'eco footprint' over the full life-cycle and cost of ownership of manufacturing, maintaining, operating and disposing retired UAVs. Furthermore, the potential risk of litigation arising from accidents involving UAVs, as well as direct or indirect claims of infringement of personal privacy or back-yard airspace are as yet "unchartered waters" and could become significant.

When it comes to retail operations, the age old adage that ‘customer is king’ still applies to the present day, just as it did twenty years ago. Relatively simple tasks such as organising the logistics for goods returns or replacements can be quite significant without a person (even a junior staff member) being in the loop.

Although avatars or agents equipped with the artificial intelligence (AI) capability have been proven in well-defined, repeatable, scenario-driven or forward-projectable applications (e.g. chess and games), they still have a long way to mature to be on par with human beings in social and contextual interactions, to even meet or exceed the ‘Turing Test’ or equivalent.

UAVs are and can be very useful and practical machines. However, by their very nature, they are mostly suited to specialised missions such as aerial reconnaissance, hostile environments (nuclear, fire-fighting, rescue, and military), leisure activities such as amateur filming in aviation deregulated zones, etc. Their ideal mission profile is unlikely to change in the immediate future, not at least until 2020.

Finally, when we look at the trade-off between the premium on delivery charge that the customer is likely to incur when opting for a UAV delivery versus that of a conventional method, would the price point be sufficiently competitive to merit the convenience of getting a 30-minute delivery slot? Or would Amazon’s tight margin retail operation with a predominantly commission based revenue model permit economy or even free delivery?

As some of our more prudent forbearers would have said “there are horses for courses”, whilst others would have immediately countered "where there is a will, there is way"! Given the foregoing assessment, it would seem that, for the moment at least, Amazon would do well to focus on further enhancing its core competencies and operations rather than using a sledge hammer to crack a nut.

Related resources:

- Here’s Why Drone Delivery Won’t Be Reality Any Time Soon (November 2015) »
The above link opens in the Times website. The Times is not associated with Excellis Business Consulting.

- Amazon chief Jeff Bezos hails UK drone rules (August 2015) »
The above link opens in website, subscription may be required for full access to the article. The is not associated with Excellis Business Consulting.

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