Drones – Changing the face of Ecommerce Logistics

Consumer research has shown that online shoppers are open to having their purchases delivered by a drone, if it helps to speed up the delivery process. Thus, it seems that everyone is talking about drones these days with investors investing millions of dollars into drone startups. And while a typical walk to work being interrupted by thousands of automated quadcopters whirling above buildings with parcels dangling from their undercarriages may seem far-fetched, a number of big businesses in 2014 experimented with this very concept.




Amazon got a hold of the concept and has applied it to ecommerce logistics. With the announcement of Amazon Prime Air, a delivery system designed to get packages into customer hands in less than half an hour. The concept is not in place yet but its inevitable considering Amazon’s history of adopting innovation. Amazon isn’t the only business to think of the idea of using drones, Domino’s Pizzas want to use the DomiCopter to deliver hot pizzas and Taobao is trailing tea deliveries in China. If this flies (no pun intended), it could be applied for food deliveries, medications, contact lenses, books, all delivered under an hour. This could be the ultimate in instant gratification and would surely give the companies offering drone based deliveries a big competitive edge.


Today, it has been nothing more than a publicity-gaining exercise, but it is no doubt a trendsetting move, if done well and some of the big ecommerce retailers have got people thinking. For now, though, authorities in different countries have been resisting the move. Understandably, the strategy has created ripples across the world and inevitably, both expressions of astonishment and scepticisms have been voiced.


But, assuming that drones are allowed to deliver products in the future; will it revolutionize the ecommerce industry?


Here are a few ways in which drones can change the ecommerce industry:


Better customer satisfaction – Drones would take service to an all new High Level with Faster and Hassle-free deliveries – Drones will be owned and operated by the retailers themselves and will not be dependent on third party carriers to deliver products. Thus, customers will have their products delivered at their doorstep faster which will help improve customer experience.


Modified supply chains – With drones doing deliveries, systems will require a complete overhaul of supply chain processes. Drones will replace carriers in most cases and thus new systems will be required to match products with drones, loading products on to the drones before taking off to different customer destinations. Manpower will be needed to be trained to operate these drones as per the aviation guidelines and service levels of the company.


Customer delivery challenges – Whilst the products deliveries will be faster, will customers like the idea of goods being delivered to their doorstep without intimation? Drones will have limitations when it comes to complicated addresses as they cannot enter into corridors or narrow lanes as they are configured to follow pre-defined or pre-configured paths. If customers stay at a place off limits, will customer come out and walk quite a few meters to accept the package? This affects the doorstep delivery strategy significantly and retailers will have to think of strategies to tackle this complex issue to ensure even customer service levels.


Will only the big boys win – Drones are and will be expensive. With the high costs, will only companies like Amazon and eBay buy drones, while the smaller and mid-sized retailer get priced out of the market due to the high cost involved and thus will not be able to compete on the service levels offered by drone led deliveries. And that’s just considering the matter from the standpoint of smaller online businesses; what about the already beleaguered brick and mortar establishments? Online shopping will become even more lucrative compared to offline shopping with the convenience of drone based deliveries.


Are we there yet? – Drone deliveries are still a few years away in my opinion. There are multiple issues and questions which need to be resolved. The regulations on flying and air traffic management needs to be hammered out including the security related issues which are attached to the subject. Then there are issues on delivering to customers who live in hard to reach places, how will they be served? Lastly, how will people react to seeing thousands of flying quadcopters all over the sky, will definitely be a strange sight.


May be in the future big logistics companies will diversify and have a drone division offering specialised contracted drone delivery services. In any scenario, commercial drones have fired imaginations, raised interest and millions of dollars are being invested to realise these ideas and concerns are being addressed as technology progresses. It will be interesting to see how the space evolves but with the adoption of drones, ecommerce logistics will definitely require a massive overhaul over the coming years…
Adrian Lloyd
Half Swiss. China obsession at Oxford. Tech obsession at Stanford GSB. Strategy consulting to Venture Capital. Tennis, skiing, Cresta riding. 4 young children, a boxer. Fabulous artist wife, Print-maker.



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