<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Samantha Lee/Business Insider</span></p></div><p></p></div></div></p><ul class="summary-list"><li>People are getting more and more unhappy about <a href="https://www.businessinsider.com/category/plastics">plastics in the ocean</a>.</li><li>Packaging companies say online retailers are feeling the pressure to use paper-based packaging, such as cardboard, over plastics.</li><li>But eliminating plastic packaging in online shopping, like <a href="https://www.businessinsider.com/category/amazon">Amazon</a>'s plastic mailers, isn't the answer.</li><li>Research indicates that cardboard and paper packaging produce more carbon-dioxide emissions than plastic. It uses lots of wood too.</li><li>Instead, retailers should look at goods on a case-by-case basis. Sometimes plastic makes more sense, but sometimes paper is the way to go.</li><li><a href="https://www.businessinsider.com/category/driving-the-future">Read more stories from Business Insider's Driving the Future series</a>.</li></ul><p>Amazon's tendency to package a tiny product in a big cardboard box has long been a source of <a href="https://twitter.com/alexsavinme/status/945566813190008832?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E945566813190008832&amp;ref_url=https%3A%2F%2Fwww.boston25news.com%2Fnews%2Fbusiness%2Fwhy-amazon-packages-tiny-items-in-huge-boxes%2F674181809">confusion</a>.</p><p>And last year the <keyword id="6354851" type="UNKNOWN" weightage="60" keywordseo="retail">retail</keyword> giant's move from cardboard to bubble-wrap-lined plastic mailers invigorated a wave of fury from environmentally conscious customers.</p><p><a href="https://www.change.org/p/amazon-amazon-ditch-plastic-please-move-to-all-biodegradable-packaging">Thousands of customers signed a petition</a> pressuring the $1 billion company to go back to more easily recyclable cardboard.</p><p>"Previously our small orders arrived in easily recyclable cardboard packaging, but a few months ago Amazon started using plastic envelopes. I diligently recycle all the packaging but can't these," Adrian Fletcher, an Amazon customer based in Scotland, <a href="https://www.theguardian.com/technology/2019/aug/20/amazon-under-fire-for-new-packaging-that-cant-be-recycled">told The Guardian in August</a>.</p><p>Customers often think of paper versus plastic, but it's not so simple. There are a number of factors to designing a sustainable package, said <a href="https://greenblue.org/author/nina/">Nina Goodrich</a>, director of the Sustainable Packaging Coalition and executive director of the sustainability nonprofit GreenBlue.</p><p>The inks and adhesives have to be recyclable in the same stream as the rest of the package, Goodrich said. If it's plastic, the polymer should be responsibly sourced. Same for the paper used in cardboard. The packaging needs to be resilient enough to ensure that the item inside doesn't get destroyed - which would negate the entire environmental effects of making the product in the first place - but also light enough that it doesn't weigh down the vehicle that's moving the package.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Robert Kneschke / EyeEm</span></p><p class="caption">The humble corrugated cardboard.</p></div><p></p></div></div></p><p>The outrage over plastics isn't limited to Amazon's packaging. Plastic waste has become a serious pain point for customers in the past year, particularly after shocking reports that humans <a href="https://www.businessinsider.com/plastic-in-oceans-414-million-pieces-trash-pacific-islands-2019-5">have dumped over 5 trillion pieces of plastic debris into the ocean</a>. About a quarter of that is single-use plastic, which has been connected to <a href="https://www.businessinsider.com/wwf-sounds-alarm-after-48-lbs-of-plastic-found-in-dead-whale-2019-4">the deaths of several whales this year</a>.</p><p>In fact, <a href="https://www.globenewswire.com/news-release/2019/06/19/1871135/0/en/Americans-Are-More-Concerned-About-Plastic-in-Oceans-Than-Climate-Change.html">65% of Americans surveyed in June</a> said that they were "very concerned or extremely concerned" about plastic waste in the ocean. Only 58% felt the same about climate change.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Danish Siddiqui/Reuters</span></p><p class="caption">The carcass of a dead whale is transported onto a truck from a beach along the Arabian Sea, in Mumbai, India, January 29, 2016.</p></div><p></p></div></div></p><p>Steve Voorhees, the CEO of WestRock, a leading packaging company, said more and more of his clients have been asking for paper packaging solutions since early 2018.</p><p>"That's when pictures of plastic in the ocean really made the media," said Voorhees, whose company employs 45,000 globally. "The consumers were disgusted by that. Over the past 18 months, corporations have taken that to heart. And they are coming out with, I believe, aspirational and appropriate objectives to address the sustainability."</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/plastic-pollution-microplastics-pervade-surface-deep-ocean-2019-6">More plastic pollution is swirling in the deep ocean than in the Great Pacific Garbage Patch. It's even showing up in the intestines of sea creatures.</a></em></p><p>A survey from WestRock indicates that consumers prefer paper packaging 38% of the time, corrugated cardboard 33%, and plastic just 9%.</p><p>Still, despite the customer frenzy <a href="https://oceanconservancy.org/trash-free-seas/plastics-in-the-ocean/">over plastics in the ocean</a>, there are some serious environmental upsides to plastic mailers. And the humble cardboard box, which plastics-abhorring consumers are pushing over plastic, is imperfect too.</p><p>"Why are we creating sustainable packaging? It's really to mitigate climate change," Goodrich said. "And sometimes we forget that in our fight to look at plastic versus paper or to get out of plastics because they're in the ocean."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Smith Collection/Gado/Getty Images</span></p></div><p></p></div></div></p><h2>The problem with plastic mailers</h2><p>The plastic mailers certainly have their flaws. The leading one that experts highlighted to Business Insider is they can't be placed in most curbside recycling bins.</p><p>Instead, customers who wish to recycle them <a href="https://www.plasticfilmrecycling.org/recycling-bags-and-wraps/find-drop-off-location/">must look up</a> where they can drop off the plastic mailers, classified as "plastic film." Retailers like Amazon <a href="https://www.amazon.com/amsc">provide links to recycling information websites</a> on its packaging to help customers make informed decisions.</p><p>"While it is helpful to provide this information, does Amazon actually expect customers to reference this website and follow the steps (sometimes multiple in the case of its Prime Now insulated pouch) to attempt to recycle its packaging?" David Pinsky, a senior plastics campaigner at Greenpeace, <a href="https://mashable.com/article/how-to-recycle-amazon-packaging/">told Mashable in October.</a></p><p>Many customers, unaware, put their plastic film materials in curbside recycling bins. That hikes the cost for municipalities to recycle and, <a href="https://www.washingtonpost.com/technology/2019/02/11/why-amazons-new-streamlined-packaging-is-jamming-up-recycling-centers/">according to a Washington Post article in February</a>, sometimes prevents large bundles of otherwise kosher recyclables from being processed.</p><p>"Reducing contamination in our recycling is huge," Goodrich said. "Part of that is getting consumers to take the plastic bags back to the grocery store, as opposed to just throwing them in their bins."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="https://www.epa.gov/sites/production/files/2018-07/documents/smm_2015_tables_and_figures_07252018_fnl_508_0.pdf">Environmental Protection Agency</a></span></p><p class="caption">Americans are using more and more plastics. They're not recycling them, though.</p></div><p></p></div></div></p><p>Further, some Amazon packaging is paper <em>and </em>plastic, which can't be recycled together. An Amazon spokesperson told Business Insider that the company was looking to eliminate that type of mixed packaging and switching "to material that is fully compatible in either paper or plastic recycling streams."</p><p>Thanks to these barriers, <a href="https://blog.aboutamazon.com/sustainability/investing-in-recycling-solutions-to-protect-the-planet">which could be addressed by more investment from municipal governments to offer curbside plastic-film-recycling options</a>, plastic packaging is far less likely to end up getting recycled than traditional cardboard.</p><p>Consumers recycle just 14.6% of plastics used in containers, <a href="https://www.epa.gov/sites/production/files/2018-07/documents/smm_2015_tables_and_figures_07252018_fnl_508_0.pdf">according to a 2018 study from the Environmental Protection Agency</a>. Americans recycle 78.2% of paper products, including corrugated cardboard.</p><h2>The cost-effective alternative is cardboard, but that's not perfect either</h2><p>The switch from cardboard to plastic is largely a cost-cutting measure. Retailers can fit more packages into vans, trucks, and planes if they're slender envelopes instead of boxes. And Amazon, for instance, saw its global shipping costs <a href="https://www.businessinsider.com/amazon-shipping-costs-soar-over-9-billion-one-day-delivery-2019-10">jump by 46% year over year</a> in the third quarter of 2019 - rounding out to a whopping $9.6 billion.</p><p>But that economic move has some environmental perks. As plastic is lighter than paper, it means the vehicles that move those packages use less gas. The standard corrugated box is 0.7 pounds, compared to .05 pounds for a bubble mailer, <a href="https://www.pac.com/2014/07/paper-vs-plastic-direct-comparison/">according to PAC Worldwide</a>.</p><p>Some even say the invention of plastic bubble wrap in 1957, which replaced ultraheavy packaging methods like bulks of paper or even rubberized horse hair, helped usher in the era of airfreight from companies like UPS, FedEx, and other small air-cargo companies.</p><p>"Before the invention of bubble wrap, you really didn't have an airfreight dynamic because the packaging was so heavy, so dense that you couldn't cost-effectively move small parcels," Ken Chrisman, a senior vice president of global commercial operations at packaging company Sealed Air Corp., told Business Insider. Sealed Air holds the patent to bubble wrap.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Matthew Horwood/Getty Images</span></p><p class="caption">A Welsh recycling facility.</p></div><p></p></div></div></p><p>"Strictly from a logistics standpoint, reducing the amount of fuel required, because the packaging is lighter, is a societal benefit," Chrisman added.</p><p>Moreover, from an emissions perspective, producing corrugated cardboard can be more harmful than making a plastic mailer of the same size. Producing 10,000 bubble-lined mailers <a href="https://www.cnbc.com/2019/07/13/amazon-prime-ships-cardboard-boxes-from-westrock-international-paper.html">produces 3,132 pounds of carbon dioxide</a>. Meanwhile, 10,000 corrugated boxes generate 17,718 pounds of carbon dioxide.</p><p>There's more research on the difference on plastic versus paper grocery bags, a split that's raged on for many more years than the e-commerce packaging debate. <a href="https://www.bbc.com/news/business-47027792">One 2011 study says</a> that one paper bag requires four times as much energy as a plastic bag.</p><p>More than 6,000 pounds of wood is needed to produce 2,000 pounds of cardboard, <a href="https://ww3.arb.ca.gov/cc/protocols/localgov/pubs/recycling_method.pdf">according to the California Environmental Protection Agency</a>.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>REUTERS/Carlos Jasso</span></p><p class="caption">People are getting more and more unhappy about plastics in the ocean. But eliminating plastic packaging in online shopping isn't the answer.</p></div><p></p></div></div></p><p>Because of that increasing public awareness over the issues related to plastic, WestRock's Voorhees said he's expecting more and more consumers to pressure retailers to ditch plastic for paper. Still, he doesn't expect plastic to no longer be a competitor.</p><p>"Paper is very well positioned to increase its relative usage versus all materials used for packaging because of the sustainability characteristics that we regenerate and we recycle," he told Business Insider.</p><p>The key, experts say, is a customized approach. Moving several goods in one corrugated box makes more sense than packaging an individual order in that one box. But as consumers begin to order more and more items individually, plastic envelopes to move each order can often be more eco-friendly.</p><p>"It's not get out of plastic at any cost because if ultimately the target is climate change, you don't want to be making tradeoffs that significantly increases your carbon footprint," Goodrich said. "It's back to recognizing that this is about a balance and it's about fit for purpose."</p><h2><a href="https://www.businessinsider.com/category/driving-the-future">Read more stories from Business Insider's Driving the Future series here.</a></h2><p class="tagline"><a href="https://www.businessinsider.com/intelligence/40-big-tech-predictions-for-2019?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=amazon&amp;itm_campaign=40-big-tech-predictions-for-2019-3"></a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/amazon-prime-members-spend-more-money-sneaky-ways-2019-9">From free two-day shipping to special Prime member-only deals, here's how Amazon gets you to spend more</a></h3>        <div>                    </div>    </div>

Viral videos have terrified people into opposing Amazon's plastic packaging. Here's why they're wrong.

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="https://www.flickr.com/photos/12567713@N00/6134503437/in/photolist-am5W9D-91XoNQ-r5Fher-34h3M5-34cyYD-9N8sTa-cCVRxb-2LY8V4-9MXMGC-8mppuE-91Ujhk-jGtJPV-5KJ27C-91XnQA-dK61bu-91XqtE-91UhPH-oGBRhd-DtXYm-oqavfH-91XmwS-phfKHj-8mpp6b-dY7BVW-uyXNNm-91Xt5q-zTV8Ej-AMHpSr-r7ToEV-91XpA7-adTgWK-FsXVS-34h8CY-oHC4wD-yZbWYy-91UjyZ-91XrEY-qBZaCK-oEBJ1L-91Xs2w-91UgED-pUp316-chemRN-9PLxib-7FHGxL-aVpWkt-34cATc-eVP7VX-34h9QC-7MjRQW">Flickr / Amazon</a></span></p></div><p></p></div></div>Amazon is building an app that matches truck drivers with shippers, a new service that would deepen its presence in the massive $800 billion trucking industry, a person with direct knowledge of the matter told Business Insider.</p><p>The app, scheduled to launch in summer 2017, is designed to make it easier for truck drivers to find shippers that need goods moved, much like the way Uber connects cab drivers with riders. It would also eliminate the need for a third-party broker, who typically charges a ~15% commission for doing the middleman work.</p><p>The app will offer real-time pricing and driving directions, as well as personalized features, such as truck stop recommendations and a suggested "tour" of loads to pick up and drop off. It could also have tracking and payment options in order to speed up the entire shipping process.</p><p>This is the latest in <a href="http://www.businessinsider.com/signs-of-amazon-getting-into-logistics-2016-2">Amazon's rumored plan</a> to become a full-scale logistics company that controls the entire delivery cycle. Over the past year, Amazon has purchased thousands of trailer trucks and dozens of cargo planes, while launching new "last mile" services like Amazon Flex that take packages straight to the end consumer.</p><p>But the broader goal is to improve <span>the "middle mile" logistics space, which is largely controlled by third-party brokers who charge a hefty fee for handling the manual paperwork and phone calls to arrange deliveries between shipping docks or warehouses. It would make shipping more efficient and cheaper not just for its customers, but Amazon itself too, who's been dealing with rising shipping costs lately.</span></p><p><span>The new service would put Amazon squarely in competition with a number of startups in this space, such as Convoy and Trucker Path, while putting a direct hit on incumbent players, including <span>the publicly listed ones like C.H. Robinson and J.B. Hunt. Amazon is currently a customer of C.H. Robinson, while CEO Jeff Bezos is an investor in Convoy.</span></span></p><p>Amazon declined to comment.</p><h2>'Exciting and confidential' initiative</h2><p>The team for this project is scattered around Seattle, Minneapolis, and Amazon's overseas offices in India. The Minneapolis office, in particular, is expected to have over 100 engineers by next year, mostly working on this project, according to our source.</p><p>In fact, <a href="https://www.amazon.jobs/en/jobs/450493">one of the job posts for the Minneapolis office</a> says Amazon is looking for a Principal Product Manager to work on "<span>an exciting and confidential initiative in middle-mile <keyword id="34991" type="ORGANIZATION" weightage="60" keywordseo="transportation">transportation</keyword> organization." </span></p><p><span>Another <a href="https://www.amazon.jobs/en/jobs/415400">job post for a software development engineer</a> in Minneapolis says Amazon's Transportation Technology division is building software that optimizes the "<span>time &amp; cost of getting the packages delivered."</span></span></p><p>It's unclear why Minneapolis has become such an important part of this project. But the city is close to the headquarters for C.H. Robinson, Target, and Best Buy, possibly making it easy to hire people away from those companies. </p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="RBC Capital" title_caption="RBC Capital Markets predicts Amazon's package volume will surpass FedEx in 3 years and UPS in 7 years." class="zoomin" href="https://static-ssl.businessinsider.com/image-960/58473f8bba6eb69a018b7cc6-2400"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>RBC Capital</span></p><p class="caption">RBC Capital Markets predicts Amazon's package volume will surpass FedEx in 3 years and UPS in 7 years.</p></div><p></p></div></div></p><h2>$800 billion industry</h2><p>The opportunity is huge for Amazon. Roughly 84% of all freight spending is on trucking, and the market itself is estimated to be worth $800 billion, according to the trucking startup Convoy. </p><p>Trucker Path, another startup in this space, says truck driving is the <a href="http://www.businessinsider.com/the-staggering-statistics-behind-americas-trucking-industry-2016-12">most common job in 29 US states</a>, but it's a market that's been slow to adopt <span>new technologies, as most of the trucking companies are small businesses, with 90% of them owning less than six trucks. </span></p><p>But unlike its competitors, Amazon has an advantage in not having to worry about demand from the shipper's side. In order to make an "Uber for trucking" marketplace work, you need demand from both sides of the equation (shippers and drivers). But Amazon already has a giant shipping network, and a rapidly growing package volume, so theoretically it shouldn't be hard to find a load match for the drivers on its platform.</p><p><span style="font-weight: 400;">There are some regulatory problems that need to be addressed. For example, drivers are not allowed to press <a href="https://www.fmcsa.dot.gov/driver-safety/distracted-driving/mobile-phone-restrictions-fact-sheet">more than a single button</a> when making a call while driving. There are also <a href="https://cms.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-regulations">strict hour limits</a> on how long drivers can go without a break. Amazon may be considering adding Alexa's voice-controls and new auto-logging features to get around these issues.</span></p><p>Trucking has certainly been one of the hottest spaces in tech over the past few years, with <a href="http://www.businessinsider.com/uber-to-launch-uberfreight-for-long-haul-trucking-2016-10">even big startups like Uber joining the race</a>. Amazon is the new 800-pound gorilla that everyone will have to be aware of.</p>  <p class="tagline">Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/white-house-master-bedroom-different-presidents-clinton-truman-ford-kennedy-jfk-2016-11">Here's how the White House master bedroom has changed from president to president</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="YybHl3NzE6d8xDpe3xWQR7MDeTEVq98L" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Amazon is secretly building an 'Uber for trucking' app, setting its sights on a massive $800 billion market

<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image"><a title_source="Reuters/Gus Ruelas / Amazon" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/53d93db86da81184650cebda-960/amazon-drone-smaller.jpg"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Reuters/Gus Ruelas / Amazon</span></p></div><p></p></div></div>Amazon CEO Jeff Bezos is known for his laser-sharp focus on a few things: Speedy delivery, the lowest prices, and a </span><a href="http://www.businessinsider.com/why-amazon-will-lose-so-much-money-in-q3-2014-7" target="_blank">willingness to forgo profits</a><span style="line-height: 1.5em;"> in the short-term to ensure them both.</span></p>
<p>This combo has proved brutal for competitors. </p>
<p>"We won't invest in a company unless they can tell us why they won't get steamrolled by Amazon," Andreessen Horowitz investor Jeff Jordan <a href="http://www.fastcompany.com/3014817/amazon-jeff-bezos" target="_blank">told Fast Company</a>. </p>
<p>Look at what just happened this week. <span style="line-height: 1.5em;">Flipkart, an e-commerce site based out of India <a href="http://www.businessinsider.com/former-amazon-executives-flipkart-2014-7">announced that it raised $1 billion in funding</a>. The </span><em style="line-height: 1.5em;">next day</em><span style="line-height: 1.5em;"> Jeff Bezos announced plans to invest $2 billion to expand Amazon in India.</span></p>
<p><span style="line-height: 1.5em;">So, when Bezos announced plans to invest in drones  that could <span>plop packages on customer doorsteps in 30 minutes or less</span> late last year, it seemed like he was once again trying to intimidate the competition.</span></p>
<p><span style="line-height: 1.5em;">However, there's more to Amazon's drone plans than just intimidation. </span></p>
<p><span style="line-height: 1.5em;">What many people missed last year has become increasingly obvious this year. Amazon needs drones because same-day delivery is quickly becoming a competitive advantage for Amazon's rivals. If Amazon really plans to achieve the Holy Grail of same-day delivery, it might have no choice but to try something crazy-innovative like drones. </span></p>
<p><span style="line-height: 1.5em; font-size: 15px;">We decided to ask around about drones to see why they</span><span style="line-height: 1.5em; font-size: 15px;"> might actually be one of the best ways for Amazon to truly tackle the last-mile problem to the degree that it wants to.</span></p>
<p><span style="color: #222222; font-size: 15px; line-height: 1.5em;">The hyper-fast delivery space is already crowded. Google recently </span><a href="http://www.businessinsider.com/google-same-day-delivery-in-new-york-and-los-angeles-2014-5" target="_blank">launched Shopping Express</a><span style="font-size: 15px; line-height: 1.5em;"> for same-day deliveries in New York and Los Angeles. eBay Now</span><span style="font-size: 15px; line-height: 1.5em;"> started making local deliveries nearly two years ago. Walmart To Go </span><span style="font-size: 15px; line-height: 1.5em;"></span><a href="http://delivery.walmart.com/usd-estore/help/helppageslinkscontainer.jsp?divid=aboutWalmart&amp;prepage=/usd-estore/delivery/deliveryslotgridframe.jsp%3Faccessible%3Dtrue%26previousPath%3Dhttp%253A%252F%252Fwrsvdin04b023%253A8081%252Fusd-estore%252Fhome%252Fhomecontainer.jsp%253F_DARGS%253D%252Fusd-estore%252Fhome%252Fredirectsignpage.jsp.otherwiseredirectfrm%26optionalid%3D#aboutWalmart" target="_blank">will deliver your groceries</a><span style="font-size: 15px; line-height: 1.5em;"> right to your door. Smaller startups - like Instacart, Postmates and WunWun - give customers the option of getting anything, instantly.</span></p>
<p><span style="font-size: 15px; line-height: 1.5em;"><span>Amazon currently offers more than 500,000 different items for same-day delivery </span><a href="http://www.amazon.com/gp/help/customer/display.html?nodeId=201117750" target="_blank">in 12 metropolitan areas</a>. <a href="https://fresh.amazon.com/welcome;jsessionid=98B644D1ACE19FF3B2D0645C5906F420" target="_blank">Amazon Fresh</a>, its grocery delivery program, only serves California and Seattle. I<span>deally, it would be able to offer rush delivery for almost everything, to almost anywhere.</span></span></p>
<p>The logistics required to make a same-day delivery model sustainable are complicated (just ask <a href="http://www.sfgate.com/news/article/Webvan-Kozmo-RIP-Money-Lessons-We-ve-Learned-2901391.php" target="_blank">Kozmo or Webvan</a>, two flame-outs from the dot-com boom). Bezos tested Amazon Fresh in Seattle <a href="http://www.cbsnews.com/news/amazons-jeff-bezos-looks-to-the-future/" target="_blank">for five years </a>before daring to expand the program to L.A. </p>
<p><span>Amazon has already been taking the delivery process more into its own hands by </span><span></span><a href="http://online.wsj.com/news/articles/SB10001424052702304788404579521522792859890" target="_blank">investing in its own delivery fleet</a><span>, </span><a href="http://www.businessinsider.com/why-amazon-will-lose-so-much-money-in-q3-2014-7" target="_blank">more spread out fulfillment warehouses</a>, <a href="http://www.businessinsider.com/why-amazon-will-lose-so-much-money-in-q3-2014-7" target="_blank">and 16 new "sortation centers"</a><span> to make shipping more efficient. But while </span><span style="font-size: 15px; line-height: 1.5em;">Fed-Ex or UPS may be too slow for Amazon's tastes, deploying its own big trucks to every specific address for every customer order on almost no notice would be unfathomably expensive.  <span>That's why Amazon needs its drones.</span></span></p>
<p><span style="font-size: 15px; line-height: 1.5em;"><span><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Amazon</span></p></div><p></p></div></div><br /></span></span></p>
<p>"They are leveraging logistics," Adrian <span>Gonzalez</span>, president of supply chain and logistics company, <a href="http://adelantescm.com/" target="_blank">Adelante</a>, told Business Insider. "Drones are another piece of the puzzle. It's not going to be the right solution for every scenario, but for certain scenarios. The whole idea here really is the ability not to lose a sale because you can't get something to the customer when they want it."</p>
<p>Right now, Amazon <a href="http://www.amazon.com/gp/help/customer/display.html/ref=hp_left_v4_sib?ie=UTF8&amp;nodeId=200105970" target="_blank">charges $8.99 per delivery, plus $0.99 for each item shipped</a> (or $3.99 with a gift card) for its same-day delivery service. But even with this premium, it's still expensive.  </p>
<p>When Bezos first introduced the drone delivery concept, the subtext was that it would only make sense if it could save the company money. In 2013, <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=97664&amp;p=irol-reportsannual" target="_blank">shipping cost Amazon $6.63</a> billion. Over the last three years combined, the net cost of shipping has been about $8.8 billion. That's a lot of money. <span style="font-size: 15px; line-height: 1.5em;"><br /></span></p>
<p>Would drones give Amazon a cheaper delivery alternative? It's difficult to say right now because drone technology is still new and there is no precedent for a retail company with deep pockets like Amazon investing in drones for delivery. </p>
<p class="p1"><span class="s1">However, RobotEconomic's Colin Lewis</span><span class="s2"> </span><a href="http://robotenomics.com/2014/06/17/the-economics-of-amazons-delivery-drones/">did some back-of-the-napkin math</a> to figure out whether drones could save Amazon some cash. His conclusion: Yes. He believes that Amazon's average shipping cost is $2-$8. With drones, if Amazon prices it right, the cost could be as low as $2 per shipment.<span style="line-height: 1.5em;"> </span></p>
<p>(Not to mention the reduced carbon emissions from delivering via drone instead of truck. "It's very green," Bezos said during the announcement. "It's better than driving trucks around.")</p>
<p><span style="color: #222222; font-size: 15px; line-height: 1.5em;">To make the complicated, costly logistics of same-day delivery worth it, Amazon needs to know that its huge investment will actually lead to increased sales. </span></p>
<p>Drones definitely play a role here. Right off the bat, the novel nature of getting a package delivered in 30 minutes or less by a futuristic-looking drone would likely reel in some curious consumers. They might buy a product offered by Prime Air just for the experience.</p>
<p>"This is another arrow in Amazon's bow to set themselves apart from the rest of the retail industry," Gonzalez says. </p>
<p>But it goes deeper than thrill-seeking. In a 2013 study, Amazon proved that speedier shipping leads to more purchases. <a href="http://www.fierceretail.com/retailit/story/the-amazon-same-day-delivery-mystery-great-conversions-few-actual-users" target="_blank">In a test with Prime customers</a>, the company found that even just displaying an icon promising same-day availability increased the likelihood of purchase by between 20 and 25%. (Interestingly, though, most ended up actually choosing next-day delivery instead of same-day.)</p>
<p>If that trend carries, Amazon could see an even greater increase in purchases if it can an offer Prime Air shipping on a bunch of products.</p>
<p><span style="color: #222222; font-size: 15px; line-height: 1.5em;">Of course, there are a bunch of ways that Amazon could deploy its drones. In Bezos' original demo video, he showed one zooming off from an Amazon warehouse. Gonzalez theorizes, however, that Amazon could also reach more diverse areas farther away from its fulfillment centers by packing 30 to 50 loaded drones on a truck, driving them to a central location, and then deploying from there. </span></p>
<p>Right now, Amazon is testing the 8th and 9th generation versions of its drones in its research and development lab in Seattle. Unfortunately for the company, <span>commercial drone use is currently illegal. </span>Federal Aviation Administration rules dictate that only hobbyists can fly small unmanned aircraft systems (sUAS) outdoors, while all commercial experimentation needs to take place inside. <a href="http://www.regulations.gov/#!documentDetail;D=FAA-2014-0474-0001" target="_blank">On July 9, Amazon filed an exemption request</a> with the FAA asking for permission to test its drones outside.</p>
<p>The administration has to come up with a plan for "safe integration" of commercial drones by September 30, 2015, though it plans to release proposed rules for small drones under 55 pounds later this year. <span style="font-size: 15px; line-height: 1.5em;">Once it comes up with that set of rules, they'll be submitted for public comment, and then reviewed again before they're finally enacted.  Even then, Amazon and others might have to keep waiting. "Safe integration will be incremental," </span><a href="http://www.faa.gov/news/updates/?newsId=76240" target="_blank">the FAA writes</a><span style="font-size: 15px; line-height: 1.5em;">. </span></p>
<p>To its credit, the FAA isn't trying to be the bad guy.</p>
<p><span id="docs-internal-guid-421705ce-6e03-39c5-196b-5d0cfc9ca2d3">"You have to appreciate the magnitude of what it is we are trying to do," FAA media spokesperson Les Dorr, told Business Insider. "We're writing rules that will apply to the most complex, busy airspace in the world. We're trying to meet our overriding goal of avoiding safety hazards but at the same time we don't want to put an undue regulatory burden on an emerging industry."</span></p>
<p>For its part, Amazon argues that it should be allowed to start testing outside so that it can be completely ready to implement its drones once the FAA makes commercial flight legal. </p>
<p dir="ltr">"Amazon always try to be one step ahead of the competition with everything they do," Gonzalez says. "This is them pushing the envelope, for providing another way to deliver packages in a very short time period."</p><p class="tagline">Disclosure: Jeff Bezos is an investor in Business Insider through his
personal investment company Bezos Expeditions.</p>

Why Amazon Needs Drones To Make Same-Day Delivery A Reality 

<p><em>Welcome to <keyword id="34991" type="UNKNOWN" weightage="60" keywordseo="transportation">Transportation</keyword> &amp; Logistics Briefing, a new morning email providing the latest news, data, and insight on how digital technology is disrupting transportation and delivery, produced by BI Intelligence.</em></p><p><strong><a href="http://www.businessinsider.com/intelligence/transportation-and-logistics-briefing" target="_blank" rel="noopener noreferrer">Sign up and receive Transportation &amp; Logistics Briefing free to your inbox.</a></strong></p><p><strong>TRANSPORTATION &amp; LOGISTICS BRIEFING will not appear Monday, September 4, due to the Labor Day holiday in the US.</strong></p><p><em>Have feedback? We'd like to hear from you. Write me at:<span> </span><a href="mailto:jcamhi@businessinsider.com">jcamhi@businessinsider.com</a>.</em></p><p><strong>NEW UBER CEO TARGETS IPO IN 18 TO 36 MONTHS:</strong> In an all-hands meeting with company employees, incoming Uber CEO Dara Khosrowshahi said the ride-hailing startup should make its initial public offering (IPO) in the next 18 to 36 months, <a href="https://www.cnbc.com/2017/08/30/uber-ipo-date-2019-to-2021.html">according to</a> a report from CNBC.</p><p><strong>In order to set the ground for a potential IPO, Khosrowshahi said he would make it a priority to "pay the bills," apparently referencing the company's continued losses.</strong> Those losses totaled $645 million in Q2 2017, despite $1.75 billion in adjusted revenue. That was down from $708 million in losses in Q1 2017, and $991 million in Q4 2016. </p><p><strong>Although Uber's revenue has been increasing and its losses narrowing, getting in the black will likely be a tall task for the company in the immediate future.</strong> Uber is facing increasing competition in multiple markets and its reputation has been severely damaged by a long string of scandals going back to the beginning of the year. Uber's share of the US ride-hailing market fell from 84% at the beginning of this year to 77% at the end of May, <a href="https://www.ft.com/content/b4fb76a6-52dd-11e7-bfb8-997009366969">according to</a> Second Measure, which analyzes anonymized credit card data. Meanwhile, Lyft has been making impressive gains - it hit the 1 million rides per day mark this past June and grew its gross bookings by 25% sequentially in Q2 to more than $1 billion. Additionally, Grab, Uber's biggest rival in Southeast Asia, is <a href="https://www.cnbc.com/2017/07/24/uber-rival-grab-expects-to-raise-2-point-5-billion-dollars-in-new-funding-round.html">expected</a> to close a new $2.5 billion funding round soon.</p><p><strong>Uber will have to prioritize whether to defend market share or cut its losses further.</strong> Reaching profitability will mean reducing the new rider discounts and incentives for new drivers that helped Uber grow its global ride-hailing business in the first place. It may also require raising prices on riders, which would likely give Uber's competitors a boost. Another option for Uber could be taking a bigger share of the revenue from rides, but that would mean paying its drivers less, possibly driving them to work for competitors.</p><p><strong>Uber also may consider pulling out of some markets, </strong>Quartz reports. It has already pulled out of China, and <a href="https://qz.com/1028866/yandex-taxi-yndx-bested-uber-in-russia-it-wasnt-cheap/">merged</a> its business in Russia earlier this year with domestic ride-hailing company Yandex Taxi. Uber may look to exit developing markets where it faces intense competition and little chance of making significant margins. Southeast Asia could be one such market, as Grab continues its expansion there, Quartz points out. Other candidates include India, where Uber is battling domestic alternative Ola, and Brazil, where it's competing with <a href="http://www.reuters.com/article/us-brazil-ridehailing-softbank-group-idUSKBN18K2XE">99</a>. Retrenching from some developing markets could help Uber further cut its losses, but it would still need to figure out a strategy for defending its position in the US, its most important market, and rebuilding its reputation.</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="BI Intelligence" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/59a86ccf79bbfd21008b71b2-960/uber gross bookings.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>BI Intelligence</span></p></div><p></p></div></div></p><p><strong>DELIV EXPANDS CROWDSOURCED DELIVERY SERVICE TO HELP RETAILERS COMBAT AMAZON:</strong> Deliv, a crowdsourced delivery startup, announced it is expanding its service to 33 new markets, nearly doubling its footprint across 23 US states and more than 1,400 cities. Some of those new markets include Denver, Austin, San Antonio, Orlando, Phoenix, and Charlotte. The startup, which was founded in 2012 and is backed by UPS, counts Best Buy, Bloomingdales, and Macy's among its retail partners.</p><p><strong>Deliv aims to help retailers improve their online sales and fend off Amazon by speeding up their deliveries. </strong>Customers can select from one-, two-, and three-hour delivery windows when they order from the retailer's app or website. This gives retailers a same-day delivery option to compete with Amazon's Prime Now <a href="http://www.businessinsider.com/amazon-prime-now-how-it-works-2017-6">service</a>, which provides free two-hour delivery on more than 25,000 items to Prime members in select cities. Amazon has been steadily expanding Prime Now, bringing it to more markets and adding new product categories - beer and wine products were <a href="https://www.popsugar.com/food/Amazon-Prime-Now-Alcohol-Delivery-43947735">introduced</a> just this week.</p><p><strong>Amazon's expansion of Prime Now could have a powerful impact on online shoppers' delivery expectations, and retailers and their logistics partners are working hard to respond.</strong> Consumers are already increasingly expecting same-day delivery - 61% of respondents to a UPS <a href="https://pressroom.ups.com/mobile0c9a66/assets/pdf/pressroom/white%20paper/UPS_2017_POTOS_media%20executive%20summary_FINAL.pdf">survey</a> earlier this year said they expect goods ordered before noon to be eligible for delivery that day. As Prime Now grows, it will likely push more consumers to expect same-day delivery, which could help Amazon steal business from competitors who don't offer it. Nearly 90% of respondents to a <a href="http://www.dotcomdist.com/Study-Delivery-Time-Influences-87-Percent-of-Online-Shoppers-92-Purchase-Decisions">survey</a> released last year by e-commerce fulfillment company Dotcom Distribution said delivery times had influenced their online buying decisions.</p><p><strong>Several retailers and logistics companies have recently announced expanded same-day delivery options.</strong> FedEx brought its same-day delivery service to <a href="http://www.businessinsider.com/transportation-and-logistics-briefing-ubers-losses-narrow-despite-lyfts-gains-drone-delivery-service-launches-in-iceland-audi-qualcomm-invest-in-connected-car-startup-2017-8">new</a> cities last week, while Walmart <a href="http://www.businessinsider.com/walmart-is-testing-grocery-delivery-with-help-from-uber-2017-8">expanded</a> its same-day grocery delivery offering with UberRUSH. Crowdsourced delivery companies - including Deliv and UberRUSH - can help retailers provide same-day delivery in urban areas by quickly connecting them with nearby couriers available for immediate deliveries. As Amazon continues to push consumers' expectations for faster deliveries, more retailers will likely turn to crowdsourced delivery options as a countermeasure to the e-commerce giant's fulfillment capabilities.</p><p><strong>Enjoy reading this briefing?</strong><span> </span><span> </span><span> </span><a href="http://www.businessinsider.com/intelligence/transportation-and-logistics-briefing" target="_blank" rel="noopener noreferrer">Sign up and receive Transportation &amp; Logistics Briefing to your inbox.</a></p><p><strong>TOYOTA TO TRACK GRAB DRIVERS TO EXPLORE FINANCIAL SERVICES:</strong> Japanese auto giant Toyota will install tracking devices on the vehicles belonging to 100 drivers who work for Southeast Asian ride-hailing service Grab, The Wall Street Journal <a href="https://www.wsj.com/articles/toyota-grabs-bigger-piece-of-ride-hailing-action-1504072197?mod=djemlogistics">reports</a>. Toyota is one of the major investors, along with Softbank and Chinese ride-hailing giant Didi Chuxing, set to put $2.5 billion in new funding in Grab.</p><p><strong>Toyota plans to use the tracking data it gathers to develop new usage-based insurance, auto financing, and other mobility services, </strong>according to the WSJ<strong>. </strong>Toyota has been very active in exploring new services. In addition to its Grab investment, it has a deal to test self-driving taxis with Uber, and partnered with car-sharing startup Getaround to <a href="https://www.wsj.com/articles/toyota-invests-in-car-share-startup-getaround-1477654599">test</a> some of Toyota's technology in its cars.</p><p><strong>The rise of alternative mobility services is opening up new revenue opportunities for traditional automakers.</strong> Besides launching their own ride-hailing and car-sharing service, automakers can also supply cars and repairs for other companies operating such services. GM's Maven car-sharing service, for example, lets Uber and Lyft drivers <a href="http://www.businessinsider.com/transportation-and-logistics-briefing-gm-explores-on-demand-rides-and-deliveries-pelotons-plans-to-disrupt-trucking-ota-updates-coming-to-trucks-2017-8">rent</a> its cars for $229 per week. Its vehicles have provided 17.5 million rides for those ride-hailing services. Toyota's interest in offering financing and insurance could be another extension of this trend. As ride-hailing services grow in emerging markets, like those where Grab operates, recruiting drivers will likely require helping them attain financing for new cars and insurance to protect them in case of accidents. Many automakers, including Toyota, already have financial services arms that specialize in auto finance, so extending these arms to offer services that cater to ride-hailing drivers would be a natural fit for these businesses.</p><p><strong>In other news…</strong></p><ul><li><strong>Apple <a href="http://www.businessinsider.com/apple-auto-engineers-join-zoox-report-2017-8">lost</a> 17 engineers from its flailing self-driving car project to self-driving startup Zoox.</strong> The engineers reportedly left because of Apple's decision to turn the project's focus to self-driving software, rather than actually building a self-driving car. The engineers who left all specialized in traditional auto systems, including braking and steering. Apple's car project has failed to make much progress since its founding in 2014, and it remains far behind other players, including Google's Waymo, in deploying test cars with its self-driving technology. Meanwhile, Zoox plans to build a fleet of self-driving vehicles to provide rides in urban areas.</li><li><strong>Swiss Post is <a href="http://postandparcel.info/82009/news/swiss-post-testing-delivery-robots-in-zurich/">testing</a> delivery robots in downtown Zurich, in partnership with robotics startup Starship Technologies and department store Jelmoli.</strong> Customers can select the delivery robots as a fulfillment option during the checkout process on Jelmoli's website, along with their preferred delivery slot. When the robot is close to the delivery location, the customer receives a code by SMS text message that allows them to unlock the robot's locker to retrieve their items. Swiss Post previously ran a trial in October 2016 with Starship Technologies, which is one of the early leaders in the emerging delivery robots space. Swiss Post said that it is planning further tests with Starship Technologies to use its robots for food deliveries and sending medical products.</li><li><strong>Daimler <a href="https://www.theverge.com/2017/8/30/16226514/smart-vision-eq-electric-future-car2go">unveiled</a> the new Smart Vision EQ fortwo Concept car, an autonomous car designed for shared mobility services.</strong> The concept features no driver controls such as a steering wheel or pedals, and an LED display on the front of the car that can display messages as the car pulls up to pick up passengers. The concept might well never make into production, but shows how automakers are thinking ahead to how the designs and functionality of their vehicles will need to change with the advent of autonomous cars that don't require a driver.</li></ul><p class="tagline"><div id="categorypromo"><p><h2><span><a href="http://www.businessinsider.com/intelligence/transportation-and-logistics-briefing">Click here to sign up for the new FREE newsletter on Transportation &amp; Logistics from BI Intelligence, Business Insider's premium research service.</a></span></h2></p></div></p>

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