Why Amazon Prime Air is a Bunch of Hot Air
It is retailers’ shortest holiday shopping season in years, so cue the ridiculous publicity stunts. That is what I thought soon after Amazon (NASDAQ: AMZN) CEO Jeff Bezos made his grand announcement about delivery drones – which are years away from being utilized – on “60 Minutes” the day before Cyber Monday. But hey, Amazon is not the only one. Kmart launched the earliest holiday TV campaign this year on September 9, in an effort to promote its layaway program for holiday gifts. It’s not that Amazon’s delivery drone idea is absurd. It’s just that the grand scale in which it was announced – with such curious timing – allows the e-commerce giant to be the butt of jokes and parodies, which it has this week. Kentucky Fried Chicken smartly took its parody to social media, where it tweeted a photo of a drone carrying a bucket of KFC chicken with this caption: “There's been a lot of talk about drone delivery. Don't fret, we're thinking the same thing. #WhenChickensFly”. And, Consumerist wittingly revealed “5 Non-Drone Suggestions for Amazon PrimeAir”, one of which includes hot air balloon delivery, “Amazon HotAirPrime”. “Sure, you’re not going to get into the nooks and crannies of densely populated urban settings, but who said the balloon needs to land? Surely Amazon could rig up a dropping mechanism that allows the package to fall safely to the ground at 9.8 meters per second,” the Consumerist article said. The drones, or “octocopters”, will be able to transport packages five pounds or less within a 10-mile radius of an Amazon fulfillment center, according to Bezos. “It will work, and it will happen, and it’s gonna be a lot of fun. I know this looks like science fiction, it’s not,” Bezos said in the “60 Minutes” interview. We are not as optimistic as the CEO of Amazon. Obviously, there are numerous legal , regulatory, and technical hurdles to overcome. We are not convinced that the packages will be delivered to the right address – when consumers are home – contrary to the Amazon Prime Air video which shows a smiling father picking up his package that has just been neatly delivered on his doorstep via octocopter. We can’t imagine the cost of operating these flying robots and how that may impact shoppers’ delivery costs. Of course, U.S. regulations are the top barrier standing in the way of such delivery drones. While Congress has directed the Federal Aviation Administration to develop a plan to integrate such drones into U.S. airspace by December 2015, the FAA does not plan to start certification of commercial drones until 2020, The Wall Street Journal reports. The FAA has a lot to worry about: earlier this year, a commercial airliner flew within 200 feet of a small drone flying at 1,750 feet over a neighborhood in New York. If the two had collided, hundreds of people could have been killed. While we are not optimistic about commercial drone delivery in the U.S. anytime soon, other countries’ governments may be on board sooner. China-based SF Express started limited live trials of package deliveries earlier this year. And, a UK Domino’s franchisee demonstrated a drone that delivers pizzas this summer. Whether or not delivery drones become a reality in the U.S., Amazon has greatly benefitted from the number of people – like you and I – debating the pros and cons of Prime Air. The free publicity has most likely boosted its holiday sales to even higher levels than is typical for Amazon this time of the year. "60 Minutes" allotted around 15 minutes to cover the Amazon story, along with many teasers and promotions for the segment. A 30-second spot during the 7 p.m. show usually costs just over $100,000, according to Business Insider. “If you figure Amazon got [a] 30-second commercials' worth of time, you can estimate that it got about $3 million worth of ‘earned’ media. But $3 million is probably a very low estimate. That's just the cost Amazon would have had to pay to reach "60 Minutes'" 13 million viewers. Thanks to all the coverage Amazon Prime Air has gotten in other outlets, many more millions of people are talking about the company,” Business Insider said. What do you think of Amazon Prime Air? Is it just a creative publicity stunt or a viable retail delivery vehicle of the future?