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Amazon, Google Drones Unlikely to Deliver Major Revenue Right Now

NEW YORK (TheStreet) -- The Federal Aviation Administration's approval of industry partnerships that will evaluate drones operated beyond the pilot's line of sight won't create much of a bottom-line benefit for retailers, including Amazon (AMZN - Get Report), anytime soon.

According to analysts, even with the FAA showing an inclination toward approving drones for commercial use, there's unlikely to be a substantial impact for Amazon, Google (GOOGL - Get Report) or any retailer because of the likely huge initial cash outlay to construct the needed infrastructure.

"This additional fulfillment method is unlikely to drive sales overall," said Leslie Hand, vice president at IDC Retail Insights. "Will consumers want to try it out? Yes. The consumers that will be excited to choose drone delivery are probably the same consumers that wait in line for the next best electronic gadget."

Amazon may be the most visible proponent of using drones having actually developed and publicized a test vehicle and program dubbed Prime Air. Amazon declined to comment for this article but the company has said the concept is not science fiction, and that with regulatory approvals it will attempt to implement drone delivery at some point in the future.

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Google, which declined to comment, has its Project Wing that first took flight last year.

Some industry watchers said certain segments of the economy could benefit by using drones depending upon how they are implemented.

Yory Wurmser, retail analyst at eMarketer, is pessimistic drones will have a major impact although he noted it could boost the revenue for any early testers and give them the additional exposure as being a market leader.

"I think any major positive impact from drone delivery is several years away, if it comes at all," Wurmser said. "Drone delivery still seems very gimmicky. I can see some small-scale trials, but any mass adoption has a range of business and regulatory hurdles to overcome."

The financial side of the puzzle is another major obstacle. Not only do the drones have to be perfected, but retailers would have to install a huge support system.


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