eBay CEO Calls Amazon Drones A Fantasy

Amazon’s CEO, Jeff Bezos, certainly caught the attention of the world’smedia earlier this week when he announced that the world’s largest online retailer was testing drones for same-day parcel delivery. Speaking on CBS’s 60 Minutes, Bezos unveiled the octocopter, a small unmanned drone that Bezos claimed could deliver a 5 pound package to anywhere within a 10 mile radius of an Amazon fulfillment center within 30 minutes. Furthermore, Bezos indicated that Amazon plans to start using the gadgets within five years, provided that FAA approval was forthcoming. According to Bezos, “It will work, and it will happen, and it’s gonna be a lot of fun.”

Now, John Donohoe, CEO of Amazon’s archrival, eBay, has countered with a healthy dose of skepticism. Speaking to Bloomberg Television, Donohoe said, “We’re not really focusing on long-term fantasies. We’re working on things that will change consumers’ experiences today.” While Donohoe’s comments are not entirely unexpected, they do illustrate the intense battle that is going on right now as eBay, Amazon and Google all race to find faster ways to ship products to consumers. In addition to these giants, a large number of startups are also trying to enter the race, providing interesting investment opportunities for venture capitalists such as Gabriel Venture Partners Rick Bolander.

In fact, it seems as if Bezos may indeed be chasing a fantasy – one day after he announced the futuristic plan, the FAA responded and it wasn’t encouraging. The federal agency indicated that it didn’t permit unmanned commercial flights at present, and had indicated as recently as November that it had no plans to do so. Further voices of dissent came from Democratic Senator Edward Markey from Massachusetts, saying that the drones should be examined before they are used for delivery to make sure that they are not capable of spying on US citizens. This is not the first time that Markey has championed privacy rights when it comes to commercial drones – back in November, Markey introduced the Drone Aircraft and Privacy Transparency Act into the upper chamber to address the same concerns.

However, in fairness to Bezos, his issues may be more regulatory than technical. Australian textbook rental company Zookal plans to start using drones next year to start delivering textbooks in the Sydney area. The company plans to go live with six drones to start with, although it has plans to roll out the service more broadly in future. The company also had ambitions to expand into the US market in 2015 using this technology, but it appears that the FAA response to Amazon is likely to thwart these plans.

Jake Rheude, the Director of Business Developing for Red Stag Fulfillment, also agrees that drones are an eventual reality of our online order fulfillment processes. “The distribution system of an economy is never static; new technologies are causing fundamental changes in how distribution works. Drones and autonomous vehicles along with RFID tags will drastically change the experiences of customers ordering products online, as well as the back end operations of the businesses selling and delivering those products.” (You can read more about Red Stag’s thoughts about this technology here)

Amazon isn’t the only US company in the delivery business that has contemplated using drones, but it is the first one to indicate that plans were in the works to deploy them. UPS evaluated them as well, but indicated around the same time that Bezos made his announcement that there were too many technical and economic barriers to pursue the technology. FedEx, however,still seems to be sitting on the fence, with Senior Vice President Patrick Fitzgerald stating, “This is something we have a lot of focus on. As it stands today, there are no drones in the delivery network.”