Amazon’s drone 'head fake’ is a distraction: Pro

Friday, 6 Dec 2013 | 3:12 PM ET
Drones are at least a decade away: Pro
Friday, 6 Dec 2013 | 11:38 AM ET
Ajay Agarwal, a managing director at Bain Capital Ventures, discusses Amazon's drone plan and what sectors will gain the most from such a delivery service. He said medical supplies make the most compelling case for drone use.

Amazon's future remains much more old-fashioned than Jeff Bezos lets on, at least if you listen to Ajay Agarwal, a managing director at Bain Capital Ventures.

During a much-hyped interview on "60 Minutes" last weekend, Bezos unveiled automated, "octocopter" drones that Amazon plans to test for deliveries. Agarwal called the announcement a "head fake" that distracted consumers from the company's less headline-grabbing future: trucks.

(Read more: Why Amazon drone deliveries won't arrive anytime soon)

An investor in a robotics company that Amazon acquired, Agarwal said he thinks delivery drones remain a decade away, and that it would piggyback package deliveries on a grocery service that it's pilot testing in Seattle and Los Angeles.

"The idea that they're going to have trucks delivering fresh groceries to families, and driving up and down your street every day, every weekimagine those trucks now delivering Amazon packages, taking back returns," Agarwal said on "Squawk on the Street." "I think that's the future, and I think the drones are a distraction. I don't think that's the game plan."

(Read more: Google's robot plan for the next 'moonshot')

To better compete with Amazon, he said, large retailers with physical stores throughout the country should leverage their inventories and proximity to consumers and start delivering.

Amazon delivery via Prime Air drone
Source: Amazon Inc.
Amazon delivery via Prime Air drone

Big retailers have been testing those kinds of delivery programs, Agarwal said, as Amazon builds hundreds of distributions centers closer to its consumers. "I think that's how brick-and-mortar folks leapfrog Amazon and deliver an experience that's even faster, better and cheaper than what Amazon's doing today."

(Read more: No time for online: Shoppers rush to actual stores)

The most practical use of drones is in providing fast delivery of medicines, he said. And despite competitors' ability to cut into Amazon's delivery business, Agarwal doesn't see an end to its "march forward." Its revenues could push north of $100 billion in the next five years.

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street"


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