Bloomberg News

EBay’s Donahoe Calls Product Delivery by Drones a Fantasy

December 06, 2013

Amazon Drone

The Amazon.com Inc. Prime Air octocopter is seen at an undisclosed location. Source: Amazon.com Inc. via Bloomberg

EBay Inc. (EBAY:US) Chief Executive Officer John Donahoe called the delivery of products by drones -- a project that rival Amazon.com Inc. (AMZN:US) is working on -- a fantasy.

“We’re not really focusing on long-term fantasies,” Donahoe said in an interview with Emily Chang on Bloomberg Television when she asked if he would be showing her a drone. “We’re working on things that will change consumers’ experiences today.”

Amazon CEO Jeff Bezos said this week that the world’s largest e-commerce company is testing drones to deliver small packages, an initiative that he anticipates will happen within five years. The endeavor was met with resistance from regulators and skepticism from couriers.

Amazon, EBay, Google Inc. (GOOG:US) and many startups are vying to get products to consumers faster to gain a competitive edge. While Amazon’s unlimited two-day delivery option through its $79-a-year Prime program set the standard, EBay has begun its own service called EBay Now that promises delivery within an hour.

The drones envisioned by Amazon would be programmed with GPS coordinates that let them fly directly to a customer’s door, dropping off books, food and other small goods, according to Bezos and a company video posted on YouTube.

Drone Hurdles

The Seattle company is waiting for the Federal Aviation Administration to set rules for the devices, Bezos said. While Congress required the FAA to create rules allowing civilian drones to take flight by 2015, FAA Administrator Michael Huerta said last month that full integration may take longer.

Meanwhile, United Parcel Service Inc. has concluded the demand for drones now is too small to overcome cost and technical challenges, Chief Sales and Marketing Officer Alan Gershenhorn said in an interview earlier this week.

Mary Osako, a spokeswoman for Amazon, didn’t immediately respond to a request for comment.

Donahoe said EBay is focused on innovating around commerce, such as its EBay Now delivery service and touchscreen storefronts.

“Bold innovation is important, but our focus on our bold innovation is around commerce,” Donahoe said. “So the notion of making a storefront window a touchscreen, I’d call that a bold innovation. By having those moonshots be very focused in our area of competence, they can grow to be important businesses.”

Donahoe also used the company’s push for mobile commerce as an example of out-of-the-box thinking that has paid off. EBay’s mobile payment volume will exceed $20 billion in 2013, as will PayPal’s, the company said in January. That’s up from a combined $27 billion from the two units in 2012.

To contact the reporters on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net; Emily Chang in San Francisco at echang68@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net


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Companies Mentioned

  • EBAY
    (eBay Inc)
    • $55.47 USD
    • 0.54
    • 0.97%
  • AMZN
    (Amazon.com Inc)
    • $329.32 USD
    • -1.55
    • -0.47%
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