Residents of Seattle are expecting e-Commerce giant Amazon.com Inc. AMZN to start the Prime Air program in their backyards soon. However, the company has not confirmed the news yet.
Amazon Prime Air
In Dec 2013, CEO Jeff Bezos told about his plans to deliver packages using drones. Amazon wanted to use unmanned drones to deliver parcels to customers in just 30 minutes and all it needed was the government’s approval.
After almost a year of struggle, in March this year, Amazon’s dream finally took off after the U.S. Federal Aviation Administration (FAA) granted it an experimental airworthiness certificate to conduct tests and experiment with certain drones. Meanwhile, the company has already begun testing drone deliveries in other countries.
Our Take
Despite being a major online retailer, Amazon operates in a business with very low barriers to entry. It is cheaper to set up and thus competition is intense. Also, existing players like eBay EBAY and Alibaba BABA are leaving no stone unturned to increase their market share.
To maintain its market position, Amazon must constantly upgrade the services. Drone deliveries are among the several initiatives undertaken by the giant e-tailer to help control the rising shipping costs and take on brick-and-mortar retailers. From taxis to bikes, Amazon has tried every possible means to quicken delivery.
The recent development shows that Amazon is moving a step toward its aim but the wait is not over. The company has only received the permission to test drones in its fleet for research, development and crew training. The FAA has not yet granted permission to conduct commercial drone flights. It seems that the company is laying the foundation by scanning the area and collecting data, which can then be used to develop the drone’s sense-and-avoid capabilities.
Amazon currently has a Zacks Rank #2 (Buy). Expedia Inc. EXPE is another well-ranked stock sporting a Zacks Rank #1 (Strong Buy).
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