Amazon’s desire to launch Amazon Prime Air, a fleet of delivery drones, is well-documented, but in the past couple of years, it’s been investing heavily in upgrading and expanding a much wider array of operations and logistics capabilities, partly to tame its growing shipping costs.
Amazon already has nearly 100 locations in North America dedicated to gathering, packing, and shipping online orders; last fall, it bought thousands of truck trailers to streamline the cost and process of getting those packages from its fulfillment centers to its sortation sites. This March, it leased 20 Boeing 767 cargo planes, each of which can haul over 85 tons of merchandise cross-country. It’s also contracted with bicycle couriers, delivery trucks, and car drivers to continue improving its order delivery times and lowering its costs.
Concurrent with these moves, the e-commerce giant has been steadily increasing its lobbying reach. As recently reported in The New York Times, Amazon was the fastest-growing tech lobbyist in 2015, spending $9.4 million. While that amount falls short of Google’s lobbying expenses, it’s almost twice as much as Amazon spent in 2014. The company has enlisted government insiders and former elected officials to try to influence pending federal legislation and regulations on drones, delivery truck sizes, highway improvements, and the U.S. Postal Service—issues that will have a significant impact on Amazon’s long-term plans.
Its most-publicized focus is on commercial drone regulations, which the Federal Aviation Administration (FAA) is expected to update this spring. The FAA and industry experts are justifiably worried about unmanned aerial vehicles (UAV) interfering with airplanes. Other concerns include operator standards, privacy and quality-of-life issues, and conflicting local, county, and state rules.
According to current FAA regulations, drones can’t be flown within five miles of airports, they must stay below 400 feet and 100 miles per hour, and they must stay within the operator’s line of sight. An operator can only fly one drone at a time.
Last year, Amazon and the Small UAV Coalition (which includes Prime Air and Google) sent letters to the FAA, protesting those rules. After receiving an FAA exemption last spring, though, Amazon has been testing its UAV capabilities out west. It’s also running tests in the Netherlands, England, and Canada, countries with less restrictive drone rules than the U.S. has.
Amazon took in over five times as much annual e-commerce revenue last year as its next-biggest U.S. rival did, so the advantages offered by its various fulfillment improvements and its growing army of lobbyists might seem like overkill. Amazon didn’t achieve its dominance by standing still, though, and it’s never been afraid to finance long-term growth initiatives, particularly when those investments carry so much promise.
Amplifying and solidifying Amazon Prime’s reputation for quick, free deliveries would help expand and lock down the company’s already-substantial audience of core customers. Pioneering and optimizing the field of retail drone deliveries would also go a long way toward helping Amazon cement its leadership position in e-commerce for the foreseeable future.
Drones aren’t the sole path to customers’ doors and hearts, however. Amazon is therefore urging Congress to fund road improvements, increase the allowable length of delivery trucks, and improve the Postal Service’s fortunes. Any one of these initiatives would increase the return on Amazon’s lobbying and infrastructure ventures; together, they would significantly enhance the company’s potential to maintain its status and achieve its overarching goal—to become not just the Everything Store but the Everything Business.
Tom Caporaso is the CEO of Clarus Commerce, a leader in e-commerce and subscription commerce solutions. Clarus Commerce powers FreeShipping.com and also customizes and manages programs such as Return Saver, which it codeveloped with FedEx, and 2-Day Shipping by MasterCard, for clients across a wide range of industries.