Situational Analysis for Amazon Prime Air

1. Lucas Silberman
October 18, 2015
Strategic Communications
Amazon Prime Air: The Future
Over the years, Amazon.com has the been the leading model for online shopping. It has
grown tremendously throughout time, with the additions of selling and buying items via Kindle,
Amazon Art, Amazon Video, Amazon Local, AmazonWireless, Amazon Prime, Amazon Prime
Pantry, and Amazon Prime Now. Literally anything can be found on Amazon. But the difference
between all those models and Amazon Prime Air is that you are still bounded by the restrictions
of shipping costs and time. Delivery services such as FedEx and UPS still reap the benefits of
transporting Amazon.com goods to the customer. Now, the game has changed. As described by
Amazon.com, Amazon Prime Air is “designed to safely get packages into customers' hands in 30
minutes or less using small unmanned aerial vehicles” (2015). The idea is so mind-blowingly
ahead of its time that it sent a letter back in July 2014 to the U.S Federal Aviation
Administration (FAA) to grant them permission to use Drones for deliveries. Before going more
in-depth of Amazon.com’s goals and challenges in promoting Amazon Prime Air, it’s important
to understand Amazon.com Inc. as a company, who its competitors are, who they’re working in
conjunction with, and why it will be successful in today’s world.
First off, Amazon.com has a reputation of being a very reliable company. On their
website, they consider themselves “Earth’s Most Customer-Centric Company,” and being online
company makes it much more necessary to be on top of their distribution (Amazon.com). They
are also a realistic company, in that management believes “E-commerce is still in its infancy,”
which humbles their performance of dominating the online market (Amazon.com). Since

2. Amazon.com’s establishment in 1995, they have expanded their sites to Canada, China, France,
Germany, Italy, Japan, Spain, and United Kingdom. Amazon.com provides the convenience of
getting anything from shoes, clothes, toiletries, furniture, and a plethora of other commodities.
Amazon Prime Air is just another asset to take Amazon.com from “infancy” to grown and
dominant.
Amazon.com has four primary customers: consumers, sellers, enterprises, and content
creators (Amazon.com). They have the database to connect to any audience as well as the
correct reputation and structure to be a reliable source. The recent expansion to faster, quicker
services such as Amazon Prime and Amazon Prime Pantry has allowed them provide quick and
easy service, with a very minimal charge of $99 a year, which is $8.25 a month. While two-day
free shipping is better than Amazon.com’s regular 5-7 day shipping, Amazon Prime Air will be
the most efficient and advanced experience ever. In addition, Amazon.com plans to make
Drone delivery $1, which completely jumps any other delivery service with room to spare
(Smith, 2015). The cost and speed this new innovation provides catapults Amazon Prime Air to
the forefront of the delivery industry.
(via Business Insider)

3. One of, if not the largest, retail companies in the United States, Amazon.com has over
244 million people subscribed, with that number growing daily (Kline, 2014). It is also the
largest internet-based retailer in the United States. Over the past 5 years, the Amazon.com
Inc.’s stock (AMZN) has made steady increase as low as $180 per share to a high of $570 per
share (Yahoo Finance). The company’s online advantage clearly has a firm grasp on the
internet-retail market, with its wide variety outmatching that of competitors. In today’s
economy, convenient online-shopping is outdueling in-store shopping, and Amazon.com is the
clear leader and has actually inspired other companies to compete in the online market.
Amazon.com has taken the initiative to contact the FAA in regards to getting the
Amazon Prime Air accepted. They hope to get the FAA’s approval for “aerial vehicles that travel
over 50 miles per hour, and will carry 5‐ pound payloads, which cover 86% of products sold on
Amazon” (Misener, 2014). Being its own supplier, Amazon Prime Air will be initiator of global
shift in shopping.
Lastly, Amazon.com is well ahead of its competitors. It’s inspired companies such as
Dollar Shave Club, Trunk Club, and Madison Reed to enter the online distributing market. It
outcompetes already established online-retailers too such as eBay.com, zappos.com, and
craigslist.com. In fact, Amazon.com is compared to eBay as “Ebay: the site your grandma
probably would have used” vs. “Amazon: the site for web-savvy millennials” (Page, 2014).
Amazon Prime Air will dominate the online shopping compared to other companies that still
need to use companies like UPS, FedEx, or USPS. It’s revolutionary. It’s bold. It’s what
Amazon.com strives to become: Earth’s Most Consumer-Centric Company.

4. As Amazon.com gets closer to getting Amazon Prime Air approved, it’s important to look
at the goals, challenges, and weaknesses of the product. The goal is simple, it’s to get people to
buy in the idea that a remote controlled Drone can deliver your shoes, Bob Marley shirt, or
graph paper for math class in around 30 minutes. The challenge is within the goal in that people
might not be comfortable with Drone’s taking over distribution of what they buy.
SWOT Chart:
Strengths:
- Brand new form of distribution
- 86% of products can be shipped
- Cheap
- Quick
- Brand new technology
Weaknesses:
- Limited by weight
- Unknown concept
- Transportation limitations
- Unproven market/technology
Opportunities:
- Entering New market
- Revolutionize shipping industry
- Consumer expectations
Threats:
- Other online retailers
- Weather
- Other postal services
- Government regulation
- Consumer stereotypes

5. References:
1 About Amazon. (n.d.). Retrieved October 2015, from Amazon.com:
http://www.amazonfulfillmentcareers.com/about-amazon/
2. Amazon Prime Air. (n.d.). Retrieved October 2015, from Amazon.com:
http://www.amazon.com/b?node=8037720011
3. Amazon.com. (n.d.). Retrieved October 2015, from Wikipedia:
https://en.wikipedia.org/wiki/Amazon.com#Amazon_Art
4. Amazon.com Inc. (n.d.). Retrieved October 2015, from Yahoo Finance:
http://finance.yahoo.com/q?s=AMZN
5. Kline, D. (2014, May 24). How Many Customers Does Amazon Have? Retrieved October
2015, from The Motley Fool: http://www.fool.com/investing/general/2014/05/24/how-
many-customers-does-amazon-have.aspx
6. Misener, P. (2014, July 9). Amazon Petition for Exemption. Retrieved October 2015, from
Amazon.com: http://z-ecx.images-
amazon.com/images/G/01/rowland/AmazonPetitionforExemption_July92014.pdf
7. Page, V. (n.d.). eBay Vs. Amazon Business Model. Retrieved October 2015, from
Investopedia: http://www.investopedia.com/articles/investing/052615/ebay-vs-amazon-
business-model.asp
8. Smith, C. (2015, April 15). Amazon's delivery drones could make 30-minute deliveries a
reality (and for a $1 fee). Retrieved October 2015, from Business Insider:
http://www.businessinsider.com/delivery-fee-for-amazon-prime-air-2015-4