Amazon.com (NASDAQ:AMZN) founder and CEO Jeff Bezos made a big reveal last night on 60 Minutes with Charlie Rose. If you weren't able to tune in, here's what you missed: delivery drones. That's right, Amazon is testing autonomous drones that, instead of dropping bombs, drop packages. This announcement is the latest in the ongoing battle among retailers to offer faster and more convenient delivery options.
The new delivery system promises to revolutionize the way millions of packages are shipped each year. The service, which Amazon calls "Prime Air," would make 30-minute deliveries a reality by using unmanned aerial vehicles to drop packages at a customer's doorstep. Amazon's drones would only be able to deliver packages weighing less than five pounds. However, that shouldn't be a problem, since about 90% of the e-tailer's offerings currently weigh less than five pounds, according to Bezos.
Amazon's drones can make delivery drops within a 10-mile radius of Amazon warehouses or fulfillment centers. That's particularly impressive considering Amazon now has 94 warehouses within the United States. Nevertheless, its new drone delivery method is still a few years out.
Bezos says the logistics software for controlling these drones will be ready for commercial use as soon as 2015. However, the Federal Aviation Administration still needs to put rules and regulations in place before Amazon, or any other retailer, for that matter, will get a green light for using drones.
While Amazon Prime Air is still a few years out, it would certainly give the world's largest online retailer an even greater edge over competitors, such as eBay (NASDAQ:EBAY).
Same-day delivery battle ground
To better compete with Amazon, eBay recently expanded its "eBay Now" same-day delivery program to major cities including Chicago and Dallas in addition to New York and San Francisco. Customers in these cities can buy products on eBay.com and pay a courier charge of $5 to have the items delivered that day using eBay Now. Going forward, the e-commerce company plans to roll out eBay Now in as many as 25 cities across the U.S., and in London, in 2014.
Additionally, eBay was able to launch its "Click & Collect" service in the U.K. this year thanks to the company's acquisition of Shutl in September. The service allows eBay shoppers to make purchases on eBay.com for pickup in nearby retail stores, similar to Amazon Lockers. Despite its growing network of delivery-on-demand services, eBay could be in trouble down the road if Amazon's delivery drones are cleared for takeoff.
Fool contributor Tamara Rutter owns shares of Amazon.com. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.