Another day, another delivery drone.

With the almost extinction of snail mail and the explosive rise of e-commerce, postal companies have been forced to modify their existing business models to that of efficiency and wide-spread accessibility.

Various companies, across all countries are currently testing the feasibility and profitability of unmanned delivery drone services, particularly in the fields of; healthcare, food and retail.

Like fine wine, drones will get better with age.

 

A recent study found that 56% of consumers aged 18-34 expect a same-day shipping choice. What’s more, after receiving same-day delivery, 74% of respondents said they were more likely to purchase from that retailer again.

This growing appetite for faster deliveries has forced e-retailers to find a new strategy in logistical solutions. This strategy is a swarm of drones buzzing in the sky, delivering everything from groceries to designer clothes.

How does it work?

Delivery drones are fully autonomous vehicles, in-built with multiple redundancies, including a “sense and avoid technology”. This hi-tech feature allows the drone to see an oncoming obstacle, like say a bird, tree or rival drone, and swiftly avoid it.

Then, once the customer makes their order, their goods are boxed, placed inside the drones’ body and sent down a track before lift-off. The drones are guided by GPS and fly below 120m to land on vacant ground near the customers home or drop the goods by a string.

So, who’s flying solo?

Major players in the delivery game DHL and UPS have already established themselves in terms of residential delivery of products. However, it is the rise of tech start-ups collaborating with local retailers, namely Flirtey and Flytrex so as to maximize their operational efficiency, which have reaped expedited growth.

The partnership between Israeli logistics company Flytrex and Iceland’s largest ecommerce website AHA, expects to make about 20 deliveries a day using drones.

Despite a few current drawbacks regarding; weight, weather and customer scepticism AHA are saving a lot of time and resources. The cost of upkeep is less, requires fewer employees and reduces delivery time by bypassing traffic.

Dominos even teamed up with Flirtey in an attempt to grab a slice of the action. Although, I doubt this will ever take off.

 

Amazon experimenting with delivery drones

Pizza drone delivery is one thing, but when the world largest e-commerce company experiments with UAV’s to fulfil orders, the whole online shopping experience will be transformed.

The online retailer plans to deliver orders within 30 minutes through its Prime Air delivery program, which would trump both its two-day Prime shipping and two-hour Prime deliveries.

While Amazon has unveiled a series of promotional videos on its drone-delivery plans, any chance of commercial operations starting, won’t be until at least 2020.

 

Today’s leader in drone delivery

With regards to a major retailer who is currently capitalizing on online delivery technologies, we turn to China, where a smarter, safer and more commercially viable solution is underway.

Chinese e-commerce giants JD.com are one of the major players in the delivery drone game. As of June 2017, they offer 7 different types of drones across 4 Chinese provinces.

So, what do we know of JD.com

Due to the sheer size and density of the Chinese market, JD don’t deliver directly to the customers door stop. Rather, they automatically fly among fixed routes from warehouses to launching pads where they are met by a contractor who then shuttles the packages the final distance to the customer.

JD.com’s unique business model allows them to reach a wider market, lower the entry barriers for global brands and simultaneously market their services in the streets.delivery

 

JD’s global expansion

JD.com holds a strong grasp on the domestic market, predominately through its online direct sales channel.  Further, with their eyes set to expand internationally, Forbes forecasts the company’s total GMV to increase to over $300 billion through 2018.

Due to a superior delivery-drone service, JD.com have enabled customers living in rural Chinese villages like Zhangwei, the luxury of same day delivery, like that of an urban shopper living in Beijing, New York and London.

 

Nonetheless, this is not to say challenges don’t exist. The technology still needs to be improved to demonstrate to sceptical consumers and regulators alike that UAV’s represent a safer mode of transportation than road delivery.

But with the clear advantages on-demand drone delivery presents, that being environmentally friendly, time-efficiency and reduced costs – don’t be alarmed when your next delivery man is a drone.

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Author Robert Joannides

Robert is a Junior Strategist at RetailOasis

More posts by Robert Joannides

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