Drone Delivery: What it is and what it means for retailers

By Alexandra Samet|October 24, 2023

In 2015, Jeff Bezos predicted that delivery drones would ultimately become as common as mail trucks. That hasn’t happened yet, but there are still plenty of companies investing in this futuristic delivery method. For example, in August 2023, Walmart announced it would add two more supercenters to its network of drone delivery hubs to offer 30-minute delivery to an additional 60,000 households in the Dallas-Fort Worth area. 

What is drone delivery?

Drone delivery involves using flying drones as a means of delivering packages from retailers to customers, much like traditional mail trucks or courier services. Drones are small or medium-sized unmanned aerial vehicles that can drive remotely and autonomously, and maintain a consistent level of flight.

Benefits of drone delivery 

Faster delivery 

Drone delivery offers the potential for significantly faster delivery times compared with traditional ground or air methods. For retailers, that could help meet the growing consumer demand for faster order fulfillment, which has become a key expectation of customers in the digital age.

Efficiency

Drones can operate autonomously and are not subject to traffic congestion or other logistical challenges that traditional delivery vehicles may face. This can lead to more efficient delivery routes, reducing the time it takes to deliver packages.

Cost savings

While there may be initial investments in drone technology, over time, retailers can potentially save on costs by reducing the need for human delivery drivers and associated labor costs. Drones can operate around the clock without the need for breaks.

Reduced environmental impact

Drone delivery can be more environmentally friendly compared with traditional delivery methods that rely on fossil fuels. Electric drones produce fewer emissions, making them a greener option for last-mile deliveries.

Increased accessibility

Drones can reach remote or hard-to-access locations, including rural areas or areas with challenging terrain, where traditional delivery vehicles may struggle to deliver products efficiently.

 

Improved customer experience

Faster and more efficient deliveries make for a better customer experience. Retailers can meet customer expectations for quick and reliable service, potentially retaining their loyalty and encouraging them to make future purchases.

Brand differentiation

Retailers adopting drone delivery can separate themselves from the competition and demonstrate to customers and prospects that they are innovative and forward-thinking brands.

Versatility 

Drones can adapt to various delivery scenarios, whether they’re delivering common products like food or more urgent ones like medical supplies. This makes them suitable for a wide range of industries beyond retail.

Uses for drone delivery services

Last-mile delivery 

Drones can transport packages from a local distribution center or retailer directly to a customer’s doorstep. In the case of last-mile deliveries, drones are typically used for delivering small or medium-sized parcels and can cover relatively short distances.

Fulfillment 

Drones can be deployed within large fulfillment centers or warehouses to assist with tasks such as picking and packing items for customer orders. They can operate autonomously to increase the efficiency of order fulfillment.

Food delivery

Some retailers and food delivery services have explored the use of drones to deliver prepared meals and groceries. These drones are equipped with specialized compartments to keep food items secure during transport.

Hard-to-reach locations

Drones offer access to hard-to-reach locations like remote, rural, or disaster-stricken areas that are typically inaccessible through conventional methods. This is especially important as drone delivery can offer underserved regions better access to healthcare. 

Drone delivery company Zipline has partnered with OhioHealth to deliver medications and lab products via drones. Zipline’s drone delivery platform will afford OhioHealth the opportunity to deliver prescriptions directly to patients’ homes and move medical supplies between the not-for-profit health system’s facilities.

Urgent delivery 

Drones equipped with medical supplies, defibrillators, or other emergency equipment can be used for rapid response in emergency situations. Delivery personnel can quickly reach accident scenes or locations where immediate assistance is needed.

Contactless delivery

In situations where contactless delivery is important, such as during health crises, drones can drop off packages without any physical interaction between the delivery personnel and the recipient.

Examples of retailers using drone delivery

Amazon drone delivery

Amazon announced its plan to launch Prime Air drone deliveries in Lockeford, California last year, investing over $2 billion in the effort. Despite Amazon’s big ambitions to drive its drone delivery initiative forward within four to five years, this endeavor has been slowed down due to delays in receiving regulatory approval by the Federal Aviation Administration (FAA) and local officials, as well as the loss of two high-profile executives.

Walmart drone delivery

Amazon’s drone delivery setbacks created an opening for Walmart to swoop in and take the lead in this space. Walmart has expanded its network to offer drone deliveries in seven states from 36 stores, and has completed over 10,000 deliveries since launching its program in 2021. 

Walmart customers in the Dallas-Fort Worth region will soon have the option for drone delivery of groceries, over-the-counter medications, and various household essentials, thanks to a newly formed alliance with Alphabet-owned Wing, a drone delivery company, per a joint statement.

How much does drone delivery cost?

A drone delivering a single package is estimated to have a direct operating cost of approximately $13.50, per a McKinsey report, which actually costs more compared with electric cars and vans doing the same single delivery.

What are the disadvantages of drone delivery?

Job loss

Delivery people could lose their jobs to automation, and those who maintained their jobs would be severely limited in their career prospects within their companies.

Privacy concerns

As drones would likely use GPS and cameras to find homes and deliver packages, this may raise privacy and security concerns among consumers. 

High initial costs

Acquiring and maintaining drones can be expensive for retail businesses. Initial costs include the purchase of the drone, necessary accessories and training, as well as ongoing expenses such as repairs, upgrades, and insurance.

Public acceptance

Not all members of the public are comfortable with the presence of drones in their neighborhoods or skies. Public perception and acceptance of drones can vary, leading to mixed reactions and potential resistance to drone-related initiatives.

Limited autonomy

While autonomous drone technology is advancing, many drones still require human operators for tasks like takeoff, landing, and decision-making in complex situations. Fully autonomous operations remain a challenge.

Security risks

Drones can be susceptible to hacking or hijacking, posing security risks. Malicious actors could potentially take control of drones for unauthorized purposes, such as surveillance, espionage, or other criminal activities.

Regulatory issues

Drone takeoffs and landings require meticulous scrutiny by the FAA and local officials. The complexities of the regulatory environment makes it challenging for drone delivery networks to expand, and there are questions about whether the return is worth the initial investment and the hurdles retailers are required to jump through.

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