Drones delivering packages: flight of fancy or future of distribution?

There has been a huge amount of excitement around the potential of delivery drones, but debate rages over whether or not they could play a meaningful role in the future of distribution. Here we take a closer look at this hotly disputed subject.

Drones delivering packages

Small crafts zipping through the skies, grasping parcels ordered by customers just minutes earlier, would once have been the stuff of science fiction. Now, forward-thinking businesses are experimenting with unmanned aerial vehicles (UAV) and edging the industry closer to a momentous leap forward.

Amazon advancement

Amazon says that it will soon be able to offer customers a drone service that will deliver packages in under half an hour. The world’s largest online retailer is so confident that this will become a reality that it is already spreading the word about its future Amazon Prime Air system. This video explains how it works:

Amazon is keeping schtum about the details, citing intellectual property concerns, but it has revealed that the drones are capable of carrying five pound packages for distances of up to 15 miles.

Other companies are making headway too, but as yet there have been no notable breakthroughs. All businesses that want to use drone delivery will have to adhere to Civil Aviation Authority guidelines. Online retailers like Quadcopters and Heliguy.com sell a range of UAVs for personal and commercial use, along with CAA approved training.

The benefits of drones delivering packages

1. Speed

Customers will receive their goods in a much quicker time than conventional methods allow. This suits some products particularly well; Dominos, for example, has been quick to trial pizza delivery by drone. A speedy service will also please demanding customers, who want or need a product in a hurry.

2. Cost

When it comes to the economics of drone delivery there is a lot that is still up in the air. Looking at the recent drop in the cost of consumer drone technology, however, means that it could be likely that UAV delivery will be cost effective. Money could be saved on vehicle fuel and delivery drivers, although a remote control pilot may be needed, depending on the drone’s level of autonomy.

3. Reputation

Businesses that adopt drone delivery early will thrill customers keen to see it in action. Companies will be viewed as cutting-edge by consumers, with the introduction of the technology providing a great story for PR and social media teams. Creating a buzz could further benefit the business with a sales uplift. Using a tool such as Brandwatch will help you to monitor brand perception.

Drones delivering packages

4. Environment

Drones are powered by batteries so don’t pollute like vehicles. An environmentally friendly delivery offering could form part of a company’s CSR strategy and it could appeal to green consumers.

The drawbacks of drones delivering packages

1. Range

At present drones are limited to short operating distances, meaning some customers will be unable to use the service.

2. Safety

Amazon’s UAVs contain ‘sense and avoid’ technology, but it may take more than that to allay fears of a collision. There are also concerns that technical errors could result in the drone falling to the ground.

3. Privacy

Drones have a camera and GPS, which may be considered to be intrusive.

4. Access

There is a yet-to-be answered question of how to service customers in apartments.

5. Insurance

Drones could be vulnerable to damage and hijacking, leading to high insurance premiums.

6. Weight

The lightweight drones can’t handle more than a few pounds of goods, meaning the delivery service is not an option for businesses with heavier products.

UAV delivery and your business

The benefits reveal that drone delivery could bring real value to your business, but there is a long way to go first. While companies continue to innovate with drone technology, it is only a matter of time before the major issues are ironed out. Whether that means that drone delivery will take off, will take longer to determine.

Joel Ross, Managing Director of drones specialist Heliguy.com, brings things down to earth:

“Currently, the opportunities to offer delivery by drones are extremely limited. Current legislation, equipment and technology simply aren’t advanced enough to meet the stringent criteria that would be required by the CAA [Civil Aviation Authority] in such a scenario. Until the legislation around drones and their pilots becomes more mature, it doesn’t seem feasible for the logistics industry. That’s not to say that it’s impossible though – it’s something we fully expect to see happening in coming years.”

Most likely your company will want to wait for UAV delivery to be tried-and-tested, in the meantime it is worth weighing up whether it is a step that your business may want to take one day. Initial considerations should be around whether drone delivery is a good fit with your business and whether customers have a specific desire to get their hands on your product quickly. If the answers are affirmative hold tight, your business could be in for an exciting ride in the not-too-distant future.

Measuring the success of drone delivery for your business will come down to comparing how cost effective it is versus traditional delivery methods. Stripping out the initial setup costs and looking at staff and running costs over a three-month period should give a clear indication of whether it makes financial sense. Also important is how customers find the service, so comparing key metrics, including repeat custom and brand perception, will help to provide a complete picture.

Thomas Quillfeldt

Thomas Quillfeldt

Editor, eCommerce Insights

February 25, 2016

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