For consumers, retailers, e-commerce companies, and logistics providers
Drone Delivery is coming. It’s now a matter of when rather than if. Companies like Amazon and Google have been so successful in creating buzz around their drone delivery programs that nowadays the average consumer primarily correlates drones with cute flying robots that are going to (one day, eventually) deliver their online purchases to their doorsteps, not the ones eliminating ISIS leaders one by one in the middle east!
I have been working in the drone industry since 2014 and more recently conducting market research in the unmanned delivery space. My deep dives into the economic and technical aspects of drone delivery have convinced me that there are real benefits to drone delivery beyond getting your pizza delivered to your balcony a little faster than the delivery guy! Autonomous cargo robots will be a game changer for logistics providers and retailers, especially when it comes to the last mile of delivery.
The TL;DR version of what you will read below comes down to three Fs! Drones will make delivery operations Fast, Fluid, and Flexible. You could probably add a fourth F to that, too, Free! Fast because drones will not be burdened by traffic congestions and will have the whole sky to them to optimize their routes in ways that are not possible on the ground. Fleets of Delivery Drones will form fluid networks of smaller units that will work in parallel and can be reorganized to meet the exact demands of the logistics network on the fly, literally. To be able to provide more (or complete) flexibility for the delivery times will be a huge win for both customers and logistics companies. No more costly second delivery attempts and fear of missing the delivery (FOMD!?). Finally, shipping costs could be massively reduced by using automation everywhere in the logistics value chain, from autonomous trucks to tiny ground robots that will deliver your groceries. What this could do the to the poor delivery guys and truck drivers is another issue!
Here’s a list of problems (based on real data, e.g. this report) that drone delivery c̶o̶u̶l̶d̶ will solve:
- Coping with increased demand during peak times. Logistics providers struggle to deliver on time during peak times like Black Friday. I can imagine in near future there will be startups focusing on renting fleets of delivery drones to other companies to help them complement their limited resources, both in terms of manpower and delivery vehicles. In other terms, we will see an on-demand’ification of on-demand delivery itself!
- One of the biggest issues of last mile delivery is not being able to deliver because the customer is not home at that time. Why this happens in the first place is the root cause of the problem. Deliveries usually happen in a fixed predetermined sequence. If customers could choose their preferred delivery time (which is already possible, though limited) unsuccessful delivery attempts will be a thing of the past. Drone Delivery will be inherently much more flexible than today’s delivery trucks and will operate in parallel versus serial which is the only way to do it today.
- Automation equals cost reduction. In those parts of the world where labor costs are high enough to justify investment in robots, logistics firms will achieve huge savings. Estimates vary in the degree of cost saving, but they all point to reduced labor costs and higher operational efficiency (refer to point 2 as an example).
- Reduce or eliminate packaging costs. It’s likely that drones and ground robots have separate compartments for each parcel. That will not only save retailers some money on soon to be discarded cardboard boxes, but also help logistics firms avoid dealing with issues caused by poor packaging.
- Close to 30% of online orders of clothes are returned. A large part of those returns are paid by the seller to keep their customers happy and reduce the friction of online shopping for clothing items. What if returns could become an integral part of the delivery process? You could have drones that wait for the customer to try-on the garments and return those which don’t fit. Going one step beyond this, physical retail space could become on-demand and mobile. Small driverless trucks could come to you with the newest and hottest fashion items tailored to your taste and size!
While cost is still the primary factor driving customer decisions for choosing delivery methods, quality of service and customer centricity are also very important factors in overall customer satisfaction. Drone Delivery will allow e-commerce and logistics companies provide more options at lower costs to their customers and remove the last barrier standing between buying local or online. As with everything else that technology touches, delivery will become an invisible part of the online shopping experience thanks to smart software and robots.
Delivery will become an invisible part of the online shopping experience thanks to smart software and robots.
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