$AMZN Drone Delivery: One Big Liability?

Takeaway: This thing smells like one big liability.

Editor's note: Hedgeye Retail Sector Head Brian McGough says caution is in order on this Amazon headline.

Amazon Testing Drones for Same-Day Package Delivery, Bezos Says

$AMZN Drone Delivery: One Big Liability? - amzndrone

  • "Amazon.com Inc. is testing drones to deliver goods as the world’s largest e-commerce company works to improve efficiency and speed in getting products to consumers."
  • "Chief Executive Officer Jeff Bezos unveiled the plan on CBS’s '60 Minutes' news program in the U.S., showing interviewer Charlie Rose the flying machines that can serve as delivery vehicles. The CEO said the gadgets, called octocopters, can carry as much as five pounds within a 10-mile radius of an Amazon fulfillment center. Amazon may start using the drones, which can make a delivery within 30 minutes, within five years pending Federal Aviation Administration approval, Bezos said."

Takeaway: This is as big an idea as we've ever heard in retail. We'll assume that AMZN's logistics team fully vetted this one before they let Bezos get on TV and talk about it. But the risks inherent to the initiative -- thousands of unmanned propeller-driven machines whizzing around the country? We're sure the FAA is thrilled with this one --- and probably the Department of Defense as well. Something tells us that AMZN's capex budget is heading higher. This thing smells like one big liability. 

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