THE DRONE DELIVERY REPORT: Opportunities and challenges in automating logistics with drones

economy

BI Intelligence

This is a preview of a research report from BI Intelligence, Business Insider’s premium research service. To learn more about BI Intelligence, click here.

Among the many ways that drones can transform business operations, few have received as much attention as delivering packages to consumers’ homes. Drones could allow companies to bypass the many challenges involved with the “last mile” of delivery — the last leg of the journey when a package arrives at the customer’s doorstep.

This last mile is the most expensive and inefficient part of parcel delivery, and a wide range of companies are exploring how drones can speed up the last mile and cut costs. E-commerce companies want to cut delivery times and costs to improve their customer satisfaction and loyalty, while legacy retailers seek the same advantages to grow their online sales.

Meanwhile, logistics providers are experimenting with drone delivery to cut costs and ward off new competition from startups and technology companies, which have latched on to drone delivery as a potential path to disrupt (or partner with) legacy logistics firms. 

However, delivering packages by drones to consumers’ doorsteps is still years away from becoming a common occurrence. Important obstacles still need to be overcome relating to drone regulations, the development of autonomous flight and traffic control systems for drones, and consumer acceptance.

In a new report, BI Intelligence examines the benefits drone delivery can provide as an e-commerce fulfillment method, and explains the different approaches companies are taking as they experiment with the nascent technology. In addition, we detail the key players working in the space and discuss the challenges drone delivery faces in reaching mainstream adoption. 

Here are some key takeaways from the report:

  • Drone delivery offers tremendous benefits in the form of cheaper, faster shipping. This could accelerate the growth of online retail sales as free and fast shipping are the most enticing factors drawing consumers to shop online more often.
  • There are two main types of drone delivery companies are exploring: home drone delivery and supply chain delivery. Although home drone delivery receives the bulk of public attention, using drones to make deliveries within the supply chain can smooth out the fulfillment process and increase efficiencies.
  • Mainstream adoption of drone delivery will take place in stages over the next few years as regulations are put in place and drone technology improves. Right now, most tests are extremely limited in scope, take place in rural areas, and do not actually deliver packages to customers’ front doors. These tests will gradually progress, eventually bringing drone delivery to more customers in populated areas.

In full, the report: 

  • Provides an overview of how drones can transform parcel delivery by automating logistics, particularly for last-mile deliveries.
  • Examines the efforts of several companies across industries that are experimenting with drone delivery.
  • Highlights the major obstacles that remain in making drone delivery mainstream.
  • Provides a timeline for the adoption and scaling of drone delivery services in the US.

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