Last night on "60 Minutes," Amazon CEO Jeff Bezos showed Charlie Rose a video from the future.
A drone with propellers, nicknamed "octocopter," snatched a package off a conveyer belt in an Amazon warehouse, took off through the door, flew above a grassy field, and dropped it off in a family's backyard. It's a neat clip (watch it below), and within five years, Bezos said, Amazon PrimeAir won't just be YouTube video. It will be a way to deliver packages to families within 30 minutes of their purchase click.
The project is theoretical bordering on science fiction, and five years is an eternity in Internet and mobile technology (five years before Apple introduced the phone I use, iPhone 4S, there was no iPhone). But in a way, Amazon's drone dreams fit snuggly into the sweep of retail innovation, which I reviewed for my last Atlantic column, The Amazon Mystery.
The turbulent 150-year history of American retail is one of enormous companies desperately trying to anticipate the whims of mobile shoppers and mobile technology. Amazon's stated plan to ask robots to deliver packages in cities is a perfect extension of the last century's lessons in how retail companies grow, thrive, and die.
Planes, Trains, and Octocopters
In 1890, the frontier was "closed," and for the first time it could be said that the union was united—by rail and telegraph. Although the population was still two-thirds rural, mass retailers like Sears and Montgomery Ward could respond to catalog orders, load merchandise onto outgoing trains, and accomplish something unprecedented. They brought the stores to the people.
For Sears to have competed directly with Wal-Mart, it would have had to rethink from the ground up how goods passed from manufacturers to consumers. Sears managers told themselves that Wal-Mart and other low-price firms succeeded because they sold cheap goods, representing a move down-market that Sears would not follow. The focus on the goods sold obscured the innovations in the way Wal-Mart and other firms organized like it handled the products. The goods were cheap partly because Wal-Mart's costs were low.
The potential for drone delivery is massive, but also, I think, inchoate. What sort of purchases are created or destroyed by having 30 minutes between you and almost every item in the Amazon catalog? How many drives to the store are eliminated? How many shopping stores and sites are obliterated by the convenience, and how much could Amazon earn charging tens of millions of households for such the service? And then, the consumer surplus: How much time and energy is saved by having robots fly the Everything Store to our doorstep? (Not to mention, how many jobs are eaten by the drones?)
It's not worth going too deep on regulatory and social hurdles for a technology that might or might not exist in half a decade. Rather, Amazon's drone dreams are another chapter in two old stories: Thinking long-term about infrastructure is what makes and destroys retail giants; and Bezos' perspective is nothing if not long-term.