Amazon.com Inc. is practicing one-hour deliveries with bike
messengers in New York City and pressing regulators to let it test
package drop-offs with drones as the e-commerce giant tries to
narrow the gap between its warehouses and its shoppers.
Amazon has been holding time trials with messengers from at
least three courier services to pick the speediest and most careful
for the bicycle-based service, which is being referred to as Amazon
Prime Now and is operating out of the company's new Manhattan
building, according to a person familiar with the test.
The trials could open a new means of cutting delivery times for
a company that is already experimenting with options like using
storage lockers, its own trucking network and even drones, which it
recently began testing in the U.K.
Already, those ambitions are bumping up against the limits of
what U.S. regulators will allow. The company wants to use drones to
deliver small packages to customers in 30 minutes or less. The
problem is the Federal Aviation Administration has effectively
banned commercial drone use, including test flights, until it
completes rules for unmanned aircraft in the next several
years.
Companies can apply for exceptions to the ban, but the process
has been slow. Amazon warned this week that it would move even more
of its drone research abroad if it doesn't soon get permission to
test-fly in the U.S., the latest sign that the burgeoning industry
is shifting overseas in response to the FAA's cautious
approach.
"Without the ability to test outdoors in the United States soon,
we will have no choice but to divert even more of our [drone]
research and development resources abroad," Paul Misener, Amazon's
vice president of global public policy, said in a letter to the FAA
on Sunday.
Amazon has built its reputation on the promise of greater
inventory and lower prices than rivals operating brick-and-mortar
stores. Its weak spot is satisfying the needs of shoppers who want
something right away. Meanwhile, traditional retailers such as
Macy's Inc. and Wal-Mart Stores Inc. are rolling out same-day
delivery services in parts of their sprawling fleets of store.
The Seattle-based retailer is erecting more warehouses close to
urban centers and is working on its ground game.
On a recent afternoon, bike messengers working for Amazon could
be seen filing out of the back of a building on West 34th Street
just steps from the Empire State Building, where the e-commerce
giant recently signed a 17-year lease.
Messengers participating in the trials are given an address and
told to bike there within the allotted time. Once they arrive, they
are required to take a photograph of the building's address and
return to the ground floor of the Amazon building, which is
referred to by bike messengers as "the base," the person familiar
with the test said.
At the base, Amazon has built a lounge replete with foosball,
pool and air-hockey tables; an arcade; and other amenities for
messengers hanging out between deliveries, the person said.
Messengers are paid around $15 an hour and work eight-hour
shifts.
Amazon has already offered a same-day service in more than a
dozen American cities, where shoppers who pay $5.99 for delivery
and order by noon can receive their items by 9 p.m. the same day.
People who aren't Prime members pay $8.99.
The Amazon Prime Now test marks the company's first U.S. foray
into superfast delivery, where it faces a bevy of challengers
including eBay Inc. as well as startups like WunWun Inc., Postmates
Inc. and car-for-hire firm Uber Technologies Inc., which launched
its own bike-courier service in New York City called Uber Rush
earlier this year. EBay has scaled back the ambition of its eBay
Now service, which dispatches couriers to stores to retrieve
merchandise, acknowledging the difficulties of one-hour
delivery.
The air is still open territory for local delivery, though
Google Inc. is testing drones as well. The FAA says it is
proceeding cautiously, because the devices pose a safety risk to
people in the air and on the ground.
Amazon has been test-flying indoors in the U.S. and above a
private field near Cambridge, England. In July, it asked the FAA
for permission to test drones in a rural area near its Seattle
headquarters. The FAA responded in October, asking Amazon why it
doesn't pursue a different exemption process and why its delivery
drones are in the public interest.
The FAA policy has riled U.S. drone makers and entrepreneurs who
say they are falling behind peers in places like Germany, France
and Canada where drone rules are looser. The U.S. has fewer than 10
approved commercial-drone operators while Europe has thousands.
Still, some observers have questioned the feasibility of drone
deliveries regardless of regulation. There are concerns about the
drones" battery life and their performance in stormy weather.
Write to Shelly Banjo at shelly.banjo@wsj.com, Greg Bensinger at
greg.bensinger@wsj.com and Jack Nicas at jack.nicas@wsj.com
Access Investor Kit for Amazon.com, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0231351067
Access Investor Kit for Macy's, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US55616P1049
Access Investor Kit for Wal-Mart Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039
Subscribe to WSJ: http://online.wsj.com?mod=djnwires