Amazon’s Bet on Unmanned Vehicle Delivery
Amazon’s Bet on Unmanned Vehicle Delivery
Amazon, originally a book selling company is a company, which strategizes on selling consumer goods and electronic equipment using online services. This is aided by the use of an online platform where consumers are able to access goods from this platform by the use of web applications (Walker & Jiwani, 2015). Jeff Bezos who is the founder and CEO of Amazon launched Amazon in 1995. Amazon is one of the leading online companies in the world. This has been aided by the integration of innovation into its system with the company now thinking about the use of drones to deliver products to customers, which is an easier, and a quicker way to serve the customers. This will also give it a competitive advantage over other e-commerce companies (Walker & Jiwani, 2015). This case analysis is going to discuss the impact and the probability of success for Amazon in launching this service.
Online Shopping History
Online shopping has become the largest marketing and business platform in the current generation, which has been made possible by the advancement in technology. Online applications enable customers to access goods and services at the comfort of their homes (Walker & Jiwani, 2015). The first development in online shopping started in 1979, which was developed by Michael Aldrich who was influenced by how long shoppers took in shopping for products at the store. Customers took a lot of time to drive to the stores, looking for items, waiting in a line to pay for their products, and driving back to their homes (Walker & Jiwani, 2015). Michael Aldrich commercialized his device, which involved using a videotext, which allowed a television set to be connected to a computer, which processed a transaction with the help of a telephone line (Walker & Jiwani, 2015).
This device improved the services offered to customers and reduced the costs associated with physically serving a customer at the store. Although the process faced some challenges which included high costs to consumers in accessing products from the firms and the issue of privacy concern by customers (Walker & Jiwani, 2015). The evolvement of technology, which involved credit cards services, telephone banking, and using the ATM to access banking services, enabled the device to be accepted by customers. The first online services involved more marketing and advertisement than online transactions due to the concerns of privacy by consumers (Walker & Jiwani, 2015).
However, in 1994, the invention of World Wide Web, which ensured security and increased connections led to an increased number of users in purchasing products online. Entry barriers were also removed enabling an increased online businesses including Amazon (Walker & Jiwani, 2015). Amazon has been able to overcome most of the challenges in the online platforms and has diversified their product lines to air travel, rental car travel, and hotel services. Due to the diverse product line and innovation strategies, Amazon has become the dominant leader in online business with over 74 billion U.S dollars in revenue (Walker & Jiwani, 2015).
Customers Readiness to Embrace and Pay for This Type of Delivery Service
Amazon’s growth strategy involves finding opportunities to serve new customers and improve the services of current customers. This is achieved by the integration of innovative strategies in their online retail services (Sutherland, 2015). Due to the diversification of marketing services, this service will positively impact customers. The main challenge that customers face in accessing products is waiting time and other costs involved with the travelling to the stores to access the products (Sutherland, 2015). Since Amazon has a large customer base, this service will positively impact the experience customers have when shopping for products from Amazon.
This service is aimed to help customers have access to products in 30 minutes or less which is an advantage for any customer (Sutherland, 2015). The customers are also able to communicate with the vehicle using gestures to help the vehicles in determining the delivery location (Sutherland, 2015). The costs involved with the delivery of products using drones is also low compared to the costs involved with other means of delivery or accessing the products physically. Customers are able to conduct repeat purchases using this service, as the process is simple and quicker to use (Sutherland, 2015).
Would Regulators Allow It?
There are regulation barriers regarding the use of drones in the United States. Although the Federal Aviation has allowed some drone delivery tests, there are concerns about the ability of the pilots to be able to see their drones when using them to deliver products to customers (Culp, 2017). This requirement demanding that all drone users should be able to see their drones physically at all times which is a safety measure is a challenge to long distance deliveries. This is a challenge for companies to test their drones’ capability in delivering products over long distances (Culp, 2017).
However, commercial use of drones does not require companies to fill forms, which were earlier a mandatory to have permission to use the drones. Focus has been shifted on safety, which is more important in flying a drone than other regulations, which are meaningless (Culp, 2017). This has led to the increase in the use of commercial drones, which is an advantage for online retailers. Commercial drone operators are also able to apply for a waiver, which can allow the operators to have a waiver on some of the regulations required on drone operations after the Certificate of Waiver has been issued (Culp, 2017).
How Would This Delivery Method Impact It Current Channels?
Using drones to deliver products to customers will improve the current channels, as integration of commercial drones will also enhance the current channel’s performance. Using drones to deliver products will reduce the lead-time, which other channels face in the delivery process (Custers, 2016). Other challenges met by other channels include traffic and other risks associated with the use of these channels. However, with the integration of drones to deliver products, these challenges can be overcome which will improve the services by these channels (Custers, 2016). Most of the current channels involve huge costs with the delivery of products to the customers. However, with the use of drones, the operational costs associated with the use of these channels will be reduced, as drones are cheaper to use for smaller packages. This is a benefit to customers as well as the business organization (Custers, 2016).
Would It Be Too Risky For Amazon To Wait To Launch This Service?
With the benefits that are associated with the use of drones to deliver products to customers, it would be too risky for Amazon to wait to launch this service. This is because the online retail platform is highly competitive, as other firms have already launched the service (Custers, 2016). If Amazon waits for too long, it may not benefit from the benefits associated with the trendsetters in the online business. With the government removing some of the barriers associated with commercial use of drones, it is a clear indication of the acceptance and a good environment for the launching of this service (Custers, 2016). The focus on most online business is the customers’ experience and the use of drones has enabled the improvement of customers’ experience as well as lowering the costs associated with the company in delivering the product to the customer (Custers, 2016).
If It Decided To Go Ahead, How Should It Launch, And To Whom?
Amazon should launch the service to customers by communicating with its customers and involving them in the launch. By allowing customers to participate in the launch, this will give Amazon information regarding the service and what amendments should be made (Sutherland, 2015). Since the drone service is meant to impact the customer, it is important for them to be involved in the process. Amazon should also review about the required regulations regarding commercial drone use and ensure that all strategies are according to the required regulations (Sutherland, 2015). The Federal Aviation Administration should also be involved in the launch as it has authority regarding commercial use of drones. Amazon should ensure that the resources required are implemented. These include enough docking stations, security after delivery of the product, and enough drones to address the demand in the number of customers requiring the service (Sutherland, 2015).
Culp, J. (2017). Drones and the government. New York: Rosen Publishing.
Custers, B. (2016). The Future of Drone Use: Opportunities and Threats from Ethical and Legal Perspectives. The Hague: T.M.C. Asser Press.
Sutherland, A. (2015). Amazon. London: Wayland.
Walker, R., ; Jiwani, R. (2015). Reinventing E-Commerce: Amazon’s Bet On Unmanned Vehicle Delivery. (Case Study No. K5-315-501TN). Evanston, Illinois. North Western University: Kellog School of Management.