The Drone Revolution

By Gary Hawkins, founder and CEO, CART

The use of drones for delivering online purchases is quickly attaining takeoff speed as the technology continues to rapidly evolve, major companies test solutions, and the key players work with the government (the FAA) to establish flight rules. Many in the retail industry see drone technology as fanciful rather than formidable, but this is changing as both drone economics and capabilities come more into focus.

Until recently, an operator was required to have line of sight to the drone so as to pilot it around any obstacles like buildings or trees. But now artificial intelligence and machine learning have made drones ‘smart,’as they are able to guide themselves around anything in their path, including other drones.

Putting its stamp of credibility on this emerging technology, UPS has partnered with CyPhy Works to test the use of drones for making deliveries to remote or access-challenged locations. In one recent test, a drone flew a 3-mile route over the Atlantic Ocean to make a medical supply delivery to a children’s camp on an island offshore.^[1] While UPS does not see drones taking the place of its ubiquitous delivery trucks any time soon, the company is working with CyPhy Works to better understand the costs and operations of drones with an eye toward beginning to make use of the technology where it makes sense.

Flirtey this past year conducted the first FAA authorized drone delivery in the U.S. The company’s drones were used to make deliveries of medical supplies to rural areas in Virginia. The drone would navigate to the delivery point where the products were lowered by a cable from the hovering drone. The company is actively seeking partners to make use of its technology in commercial settings.

And then there is Amazon. The company’s drone program, launched in 2013, is central to its future. Delivery drones combined with the growing use of robots in Amazon’s distribution centers is moving the company towards an autonomous future that can potentially transform its cost structure. Amazon is seeking to reduce its unit delivery cost by half, which would transform online shopping economics and pose even more threat to brick & mortar retailers.

While much of this sounds fantastical to many in the staid consumer packaged goods retail industry, consider that many experts believe the widespread use of autonomous drones will arrive before the widespread use of self-driving cars. When you consider that Amazon has created a network of distribution centers that are within a 20 miles of 40% of the U.S. population, and that 80-90% of Amazon’s deliveries weigh less than 5 pounds, it is not surprising the company is committed to using the technology to transform delivery.

Not to be left behind, Walmart is also extensively testing drone technology but has taken a different approach. The company is using drones within its massive distribution centers to fly up and down the aisles looking for out-of-stock slots and misplaced products. Flying the drones inside means not having to comply with FAA regulations, so Walmart can ramp up the use of the technology as quickly as it wants.

Starship Technologies is taking drone technology out of the sky and putting it on… sidewalks. The company has tested its delivery drones in Washington, DC, using them to deliver groceries and meals from restaurants. Starship’s ‘land drones’ use nine cameras, multiple sensors, GPS, and detailed maps to navigate its route. If the delivery drone has any issues getting where it’s going, a human operator can take control remotely.

The drones move slowly — about 4 mph — making them easy for people sharing the sidewalks to avoid. Because that slow speed makes longer distance deliveries more challenging, the company has partnered with Mercedes Benz to build a van that holds up to eight drones and up to 54 delivery packages. The idea is that the van can go to a neighborhood, discharge the drones to make all the nearby deliveries, and then move on. The London based company is moving quickly, testing its technology in Switzerland where it is being used by the postal service, and is making food deliveries in Estonia.

Mercedes’ interest in the drone space has also led to a partnership with Matternet, a drone company out of Menlo Park, CA. Mercedes recently announced it would be investing up to $560 million over the next several years building a network of electric vans which would serve as a home base and launchpad for delivery drones.

What’s driving this interest in drone technology beyond potential delivery cost savings? One of the fundamental drivers is the worsening state of the transportation infrastructure in the U.S. The Department of Transportation has warned that without fast, significant investment, our roads, airports, and other systems will not only continue to decline but become increasingly clogged, seriously jeopardizing efficient distribution by the 2040s.

Given how fast drone technology is advancing retailers need to keep this on their radar screens as last-mile delivery options focused on getting products ordered online to customers as quickly and efficiently as possible plays an increasingly important role in the ecommerce world. Brick-and-mortar retailers should be thinking through how best to use these new capabilities when combined with their neighborhood stores and driving synergy. Perhaps they’re using drone delivery like that offered by Starship Technologies; a fleet of ‘land drones’ flowing out of the neighborhood store to make deliveries each day.