Google Inc (GOOGL) & Amazon.com, Inc. (AMZN) Can Reinvent Distribution with Drone Delivery

Amazon.com, Inc. (NASDAQ:AMZN) and more recently Google Inc (NASDAQ:GOOGL) have taken up on a challenge to deliver products purchased online to the customer’s door in around thirty minutes or even less with the help of the drones. In a segment on CNBC, James Temple, re/code senior editor, has said that this could be a turning point in the delivery business and possibly posing a serious threat to traditional retailers.

“[…] The biggest challenge that has remained between physical and online retail is the promise of immediate gratification and if you get drones to the point where they can ship products in half an hour, […] that really does close the gap between buying something at Amazon.com, Inc. (NASDAQ:AMZN) and drive it to Wal-Mart to get it that very day,” argues Temple.

A similar promise has been made by tech companies, including Amazon.com, Inc. (NASDAQ:AMZN), 15 years ago during the tech-boom, but all of them dropped the idea as the bubble burst. Now it is different, suggests Temple. While in the 2000’s the companies tried to make instant deliveries by hiring a lot of staff which proved to be uneconomical, now there is a new drone technology that could prove to be much cheaper and more efficient.

“[…] I am comparing it to the Internet vs. newspapers; it makes more sense to be able to deliver a product, as the crow flies, directly across town to exactly where it needs to be without having it idled in traffic and drop it precisely where it needs to be […],” adds Temple.

However, there are still a lot of technical and regulatory issues to be fixed before we can see the new technology at work. For instance, Google Inc (NASDAQ:GOOGL) is making its tests in Australia, because in the US, Federal Aviation Administration does not allow commercial operators to fly unmanned vehicles – drones. Amazon.com, Inc. (NASDAQ:AMZN) has asked the government to be granted an exemption, but has not received yet an official response.

Disclosure: none