- Retail drones will expand from nearly 35,000 in 2022 to over 110,000 in 2024.
- This article looks at how Amazon, UPS and Domino’s are experimenting with drone delivery.
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What is Drone Delivery?
Drone adoption is growing rapidly among both consumers and companies, and the retail industry is leading the way in that adoption. Drones could serve different purposes for retailers, but drone delivery (which is exactly what it sounds like: products delivered by drone) is the most well-known and readily apparent.
Retailers, restaurant chains, and delivery companies are trialing drone deliveries across the US as they look for ways to speed up delivery times and reach rural communities.
First Drone Delivery – A Domino’s Pizza
Drone delivery pizza became a reality in November 2016 when Domino’s, with its drone delivery partner Flirtey, dropped off an order at a customer’s door at 11:19 a.m. in Whangaparaoa, New Zealand, 25 km north of Auckland. (If you’re curious, the first pizza drone delivery was an order of a Peri-Peri Chicken Pizza and a Chicken and Cranberry Pizza.)
A team of drone experts and a pilot autonomously controlled Flirtey’s DRU Drone through GPS navigation to drop off the pizzas.
Amazon Drone Delivery
Pizza drone delivery is one thing, but when the largest e-commerce company in the world starts toying with the idea of using unmanned aerial vehicles (UAVs) to fulfill orders, that’s another story entirely.
At Amazon’s 2019 re:MARS conference, the e-commerce giant stated that it plans to launch its drone delivery service, Prime Air, “in a matter of months.” Amazon plans to deliver customers’ orders within 30 minutes through its Prime Air delivery program, which would blow away its two-day Prime shipping and two-hour Prime Now deliveries.
The Prime Air delivery program uses autonomous drones guided by GPS systems. With last mile delivery being the most expensive and time consuming part of the shipping process, drone delivery has the potential to give Amazon a leg up on other logistics companies.
Alphabet Drone Delivery
Google-parent Alphabet’s Wing is a drone delivery service in partnership with FedEx and Walgreens. It delivers select FedEx packages as well as health and wellness products, like over-the-counter medicines, from Walgreens.
Wing’s drones deliver packages that weigh between two to three pounds right to customers’ doorsteps. While taking advantage of Wing’s ability to improve speed and cut costs, Alphabet also boasts fuel efficiency as the drones are driven by an all-electric power system.
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UPS Drone Delivery
In 2019 the Federal Aviation Administration (FAA) approved UPS Flight Forward to become the first-ever drone service operating as a commercial airline. Business Insider Intelligence reported that although the drone service can only operate in suburban and rural regions, it has complete autonomy on size and scope of its drone operations.
Walmart Drone Delivery
Walmart is also quickly taking the lead on delivery by drone, an area where Amazon was meant to be the pioneering force. The big-box retailer made over 6,000 drone deliveries in 2022, while the latter only began offering the service in December.
Delivery Drones Pros & Cons
Delivery drones have both pros and cons, even though the benefits might be more readily apparent off the bat.
- As discussed above with Amazon, companies would save money on shipping costs, which would in turn reduce costs for consumers.
- Consumers would receive their packages far more quickly and reliably, which would build consumer trust and encourage repeat purchasing.
- Shareholders of companies who employ drone delivery to cut costs would likely see some of those savings trickle down to them.
- Delivery people would lose their jobs to automation, and those who don’t would be severely limited in their career prospects within their companies.
- Consumers could raise privacy concerns, as drones would likely use GPS and cameras to find homes and deliver packages.
Future of Drone Delivery
Long-touted automated systems are starting to make a difference for a broad variety of retailers. These retailers see delivery drones, automated fulfillment centers, in-store robots, and other automated devices as key tools to meet consumer expectations for quicker and better service.
The number of delivery drone units is still small—only about 35,000 by the end of 2022—but the growth rate is a rapid 55%. It’s still very much a niche but growing swiftly.
We decreased our forecast by 6% in 2021 and 10% in 2022 due to delays arising from technical challenges. As those issues are resolved, we expect adoption to increase rapidly, which has already begun. Walmart expanded its DroneUp delivery networks, Walgreens and other Texas retailers partnered with Alphabet’s Wing subsidiary for drone delivery, and Amazon announced plans to start a drone delivery service called Prime Air in late 2022.
Once these automated deliveries take off, ecommerce spend will follow. Prescription, food delivery, and instant needs will soar with effective drone infrastructure. That future isn’t here yet, however. Given the expense of operating drones, as well as their limited range, it will be some time before drone delivery services become a regular part of retailers’ last-mile capabilities.