Some Hurdles Cleared, Others to Come

But back to delivery drones. Except for important safety protocols and licensing standards, many of the logistical matters related to drone delivery should be left to the market and the innovators. How will we deliver to high-rises? Someone will figure it out. What about rural delivery? Technology and warehousing will address much of that. Chalk that up to the “messy early years,” that I described seven years ago.

Let’s just get more delivery drones safely into the air! I say “more” because they’re already out there.

The good news is that the FAA seems to be willing to get out of the way of the industry and let this happen for the most part, again after putting a few safety guardrails in place.

That’s why we’re finally on the cusp of widespread implementation of this service category – and just in time given the shortage of labor and the explosion of the online economy.

Will We Even Know the Date When it Happens?

Like many breakthroughs, there won’t be a red-letter day where the switch is thrown, and delivery drones flood the skies. We’ll begin seeing them more and more until we don’t really notice them at all.

A colleague of mine was visiting friends in a Seattle suburb recently and told me he saw one of Amazon Prime’s Scout robots rolling down the sidewalk making a last-mile delivery. Needless to say, he noticed it, but the locals he was with seemed to take it in stride. In fact, many companies are deploying delivery robots in certain areas to deliver groceries, prepared food, and light packages.

We’ve reached the tipping point for delivery robots, and delivery drones aren’t far behind.

Although they’re not routine or widespread, commercial drone deliveries are happening – mostly launched as pilot projects and publicity demonstrations or for emergency medical deliveries.

Wings, an Alphabet company, was set to begin drone-based delivery services last month in select Dallas-Fort Worth suburbs after successful experiences in test markets in Australia. Alphabet’s Wing is now delivering via drone for Walgreens in those Texas locations with plans to work with other healthcare providers and retailers.

Interestingly, and as an aside, Alphabet’s Wing drones don’t land at their destination – they drop their cargo from 20 feet or so with a tether line. Once it reaches the ground, the container is automatically unhooked.

Can Drone Delivery Be Profitable?

Drones won’t be widespread until the path to profits is clear. It’s hard to define where “pilots” end and “regular service” begins for most drone-based packages and food delivery. We can be sure though, that it will quickly become the norm right around the time that there are sufficient efficiencies in the technology and demand for the service to send the profit projections in the right direction.

We’re on that path now, and we have plenty of proof-of-concept examples, thanks to the pilot programs. The vehicle technology is good and it’s only going to get better. There are tens of thousands of documented successful deliveries, primarily in non-U.S. markets.

In addition to vehicle enhancements that will add energy efficiencies and reduce capital costs, we’ll have continued breakthroughs in systems and processes, such as the ability to make multiple stops and deliveries on a single trip.

One evolution that’s lacking, which accounts for the bulk of my 4-6-year estimate, is the lack of certainty around local regulatory authorizations – it will likely be a city-by-city approval process for every company and its technology.

And then there’s the demand side. The pandemic propelled the market for home deliveries in general to levels that would have otherwise taken decades to reach – if even then. This demand will need to remain high if the delivery drone sector is going to be sustainable and profitable.

The news is encouraging there, too. One consumer survey indicates that consumer demand for home delivery will likely continue to drift up even as pandemic restrictions are lifted.

For many, home delivery clearly is a convenience worth paying for. That particular survey showed, though, that the reliability of current systems has a long way to go in the eyes of the home consumer. That means delivery drones will need to make the case – and prove it very quickly – that they’re a reliable and predictable delivery solution. In other words, they’ll need to do better than Grubhub, Uber Eats, and Instacart.

The Markets Seem to Back Delivery Drones

Maybe the best indicator of the potential for drone delivery might be the willingness of investors to back these ventures and companies.

Market analysts are generally bullish on this sector, with some, for example, citing the possibility of automated fulfillment centers with a nearly literal beehive of activity as orders are filled by robots and delivered by drones.

There are numerous analyses, such as this one from Data Bridge Market Research, that indicate the growth rate in drone package delivery will be well into the double digits from now and into the foreseeable future.

So don’t be disheartened. Drone deliveries will soon be coming to your doorstep. This time I’m positive.

Source link