4/10/14

Amazon’s delivery drones get another boost from Bezos

In his letter to shareholders, Amazon’s CEO details how many marriage proposals and bedtime-story requests have come through the Kindle Mayday button, along with other news from the retailer and a hint of its future plans.

Thad Rueter , Senior Editor

Amazon.com Inc. plans to expand e-commerce Sunday deliveries across “a large portion of the U.S.” population this year. And those fulfillment drones that were widely covered and widely mocked last year? Perhaps they are not much of a joke or marketing stunt after all.

Amazon CEO Jeff Bezos this week released his annual letter to shareholders of the e-retailer, which is No. 1 in the Internet Retailer 2013 Top 500 Guide and the Europe 500 guide. The letter contains few surprises from a company known for reticence, but does at least hint at what Amazon has planned.

Working with the U.S. Postal Service, Amazon last year kicked off Sunday e-retail deliveries in New York and Los Angeles. It had said earlier it wanted to expand the service to Dallas, Houston, New Orleans and Phoenix. That stands in contrast to such countries as China and India, where, Bezos says, Amazon relies on bike couriers for deliveries to overcome immature fulfillment infrastructures.

Bezos promises more “invention” in fast deliveries, including with drones. “The Prime Air team is already flight testing our 5th and 6th generation aerial vehicles, and we are in the design phase on generations 7 and 8,” he writes. Amazon late in 2013 announced it was working on a drone-based delivery system called Prime Air. Amazon Prime is the two-day free shipping program that costs members $99 per year.

Other highlights of the Bezos letter to Amazon shareholders include:

• The e-retailer’s fulfillment network, totaling 96 warehouses around the world, underwent 280 “major software improvements” last year.

• In 10 U.S. states, Amazon operates what it calls Virtual Contact Centers. “Under this program, employees provide customer service support for Amazon and Kindle customers while working from home,” Bezos writes. He says he expects to expand the program to 10 more states in 2014.

• The e-retailer’s Amazon Fashion apparel and shoe division operates from a 40,000-square-foot studio in Brooklyn that processes an average of 10,413 photos per day.

• Amazon’s Mayday button—which enables a consumer with a Kindle Fire HDX tablets to tap to connect via live video with an Amazon support agent who can show the shopper how to use the device, talk them through a problem or remotely control the tablet—has attracted “amusing” requests, Bezos writes. The employees on the other end of those buttons have received 35 marriage proposals, 109 requests for assistance in ordering pizza (Pizza Hut beats Domino’s, but only by a “slim margin”) and three requests for bedtime stories. As well, those Mayday professionals have been serenaded by customers 648 times; in 44 instances, “the Mayday tech advisor has sung Happy Birthday to the customer,” Bezos says.

“Fulfillment innovations continue at a rapid pace,” writes Matt Nemer, an analyst at Wells Fargo Securities, in a note analyzing the Bezos letter. “Expect Amazon Prime to get bigger and better.”

Topics:

Amazon Prime, Amazon.com Inc., delivery drones, Jeff Bezos, Kindle, Matt Nemer, Mayday button, Prime air, Wells Fargo Securities

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