Amazon (AMZN - Free Report) has introduced an electric drone designed for delivery of goods at a technology conference named re:MARS (Machine Learning, Automation, Robotics and Space).
The latest move bodes well for the company’s strengthening delivery system which is aiding it in enhancing better shopping experience.
We note that the new drones are well equipped to fly up to 15 miles. Further, these drones are capable enough to deliver packages weighing 5 pounds within half-hour.
Additionally, Amazon has received one-year approval from Federal Aviation Administration (FAA) for testing these drones and further its development activities. The company intends to test these drones with deliveries of household goods for the time being.
The company’s growing customer-oriented approach is evident from its focus to develop these drones in accordance to aviation rules. This customer-centric approach is aiding the company in strengthening presence further in the e-commerce space.
Delivery Drone Market Holds Promise
The growing proliferation of online shopping driven by increasing penetration of Internet and smartphone usage has led to the emergence of delivery drones which are capable of making rapid parcel deliveries.
Further, demand for these particular drones is being aided by innovation in cargo transportation.
As per a report from MarketsandMarkets, the global drone logistics and transportation market is expected to hit $11.2 billion by 2022 and is likely to witness a CAGR of 21.01% between 2022 and 2027 to reach $29.06 billion by 2027.
We believe Amazon is expected to rapidly penetrate this booming market with the help of its innovative delivery drones which are based on AI.
AI techniques help these drones to navigate properly, reach their destination and drop off the packages by detecting telephone wires, people, animals and properties on the ground. Moreover, the AI-based sensors will aid the drones in flight without threatening traditional aircraft.
The potential of the delivery drone market is alluring enough to attract many other companies to make advances into it.
Moreover, companies like Alibaba (BABA - Free Report) and JD.com (JD - Free Report) have already introduced drones in the e-commerce market, consequently intensifying the competition.
Further, Alphabet’s (GOOGL - Free Report) Google is leaving no stone unturned to strengthen its footprint in the e-commerce space on the back of its strategic partnerships, is also gathering steam to start testing drone deliveries. Alphabet’s drone company, Wing, has recently won the FAA approval for its drones.
Nevertheless, Amazon drones are capable of tilting and flying just like a plane and this separates them from others as they can fly only horizontally.
This feature remains a major positive as it will help these drones to avoid any unwanted collision with any other aircrafts.
Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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