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Drones Are Coming to America’s Front Doors. But Whose Drones will Dominate?

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One of the contenders for last-mile drone delivery supremacy. (Image: Walmart)

If it seems like people are always droning on and on about unmanned aerial vehicles, better get used to it. Every day, it seems, the use of drones to make last-mile commercial deliveries flies closer to reality.

Case in point: Walmart recently revealed it had launched a pilot project in Fayetteville, N.C., to study the delivery of grocery and essential household items from its stores using Flytrex’s automated drones. On the same day, a new report dropped (not from the sky, we hope) that attempted to game out how certain companies might come to dominate retail drone delivery.

“We know that it will be some time before we see millions of packages delivered via drone,” blogged Tom Ward, a Walmart senior vice president. “That still feels like a bit of science fiction, but we’re at a point where we’re learning more and more about the technology that is available and how we can use it to make our customers’ lives easier. Take, for example, our autonomous vehicle work with Gatik, Ford and Nuro — we’ve gained loads of valuable insight into how autonomous vehicles fit within our business.”

Ward said projects such as Walmart-Flytrex pilot “will help shape the potential of drone delivery on a larger scale.”

“It is a logistics company first, and a drone business second. Its most important innovations come through supply chain management.”

Harrison Wolf, WEF

But at least three other factors will help define success in the commercial use of drones, according to a new report from the World Economic Forum (WEF). Noting that Amazon, Alphabet (Google) and UPS are among the big companies to have joined the great drone race, WEF observed that “successful drone delivery has proven over the past few years to be less about the technology and more about how the drones are used.”

Author Harrison Wolf, WEF’s aerospace lead, cited drone delivery startup Zipline as a company that has already “redefined what is possible using drones.” Simply put, “it is a logistics company first and a drone business second. Its most important innovations come through supply chain management, integration with existing workflows and continued education of their stakeholders in the process.”

The commercial drone industry is projected to be worth $12.6 billion by 2025. Wolf said the answers to three questions could determine which organization(s) come to dominate drone delivery:

  1. Who will build the drones? — Amazon and Google’s decision to build the drones themselves is “risky,” he wrote. While it might give them more control over the technology, “hardware, as they say in Silicon Valley, is hard.” Wolf seemed intrigued by the approach of UPS, which is working with drone startups. “While UPS will be reliant on portfolio companies to perform and achieve certifications, treating a drone like a truck to optimize how it is used may be the right play,” he speculated.
  2. Is there an existing logistics network? — A company such as Amazon would seem to have the leg up here. However, “the real question is whether you would rather be a supply chain company looking to integrate a technology or a tech company looking to create and refine one piece of an entire logistics network,” Wolf said.
  3.  What’s the “tech X-factor?” — “Major players in the drone delivery race in the U.S. have real differentiators when it comes to technology.” Google’s Wing, for example, could leverage the company’s other technologies such as high-resolution mapping and health-sensor data. The question becomes, which differentiators will make a real difference when those packages start landing on front porches across America?

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