When I first wrote a post in August of 2013 suggesting that companies will deliver products via drones, a number of readers "laughed at me" in their disparaging replies. Here is just one of the more polite ones...
"What makes you think these drones won't have cameras, and audio recorders and sniffers? What leads you to think that these tracking devices will be accurate, tamper-proof, incorruptible and honest? Will they deliver to my fourth floor walkup? My fortieth floor elevator lobby? Stinky gas driven, or nuclear? Shoot-able? How about net-able? The unemployed, more everyday after this, will grab these and sell the parts. Especially the nuclear fuel. Yeah. Can't wait."
Vindication from Walmart
Walmart just announced they've asked the FAA for permission to test drones for delivery in its parking lots and at customer homes. It also wants to use drones to check inventories and the condition of its vast network of facilities. Since there is a Walmart store within 5 miles of 70% of the US population, drones potentially provide an efficient way to move product through its extensive supply chain.
Further vindication from Jeff Bezos and Charlie Rose
During a 60 Minutes broadcast, Jeff Bezos showed Charlie Rose a room full of "Octocopters" branded as Amazon Prime Air that will deliver products to customers. Bezos, Amazon, Charlie Rose and 60 Minutes have the corporate image credentials to give this idea credibility, and once the FAA issues are resolved, you will see this happen. At the time of the broadcast, Bezos said he is an optimist and predicted it will happen in 4 or 5 years. Others said it would take 15 years.
The FAA has already issued exemptions to the commercial drone ban
Based on the FAA's latest rulings, it looks as if Bezos' prediction is the accurate one. Of the 750 requests for exemptions, the FAA has already issued 48 to companies including Chevron, Berkshire Hathaway's railway company (BSNF), State Farm Insurance, and numerous mapping and entertainment companies that use drones for filming. It has also given Amazon the OK to test commercial drone use for delivery.
Potential for being a very efficient distribution channel
As many already know, the Internet is a very convenient channel for distributing products. Buyers can search for what they want, find products that fit their needs, compare prices, read reviews on the products and sellers, and order products 24/7 without leaving the comfort of their home or place of business.
The problem is that for products that are not in digital form, buyers have to wait for packages to be physically sent via common carriers or through the mail. Too often, shopping carts are abandoned once charges are shown. Currently, this is the bottleneck in the process. To overcome this bottleneck, those that want the product right away typically travel to a local store with the hope of finding it in stock. Of course, buyers still have to make their way to the store as they worry about time, traffic, parking, and other inconveniences. And, in some cases, they are disappointed to learn that the store does not have what they want.
Technologies to solve the distribution problems
There are some interesting technologies available (and on the horizon) that might provide a solution to the problems related to physically distributing products. In particular, drones and 3-D printers hold a lot of promise in the not so distant future.
Thanks to the nightly news, when most people think of drones, they picture small pilotless, plane-like devices used by the military for hunting terrorists. Drone manufacturers want to change this image and widen the target audience for their products. Physical delivery of products is one of the potential uses of drones that excite marketers.
- Current price points. Currently drones can be bought online for under $300. They can find locations via GPS, and have the capability of delivering products to their destinations. Operators can control them using a smart phone and Wi-Fi. Of course the $300 variety is limited in terms of payload, flying distance and time. For applications that require 15 to 20 minutes of fully autonomous flight, drones are available for roughly $600. According to the Washington Post, Chris Anderson, former editor of Wired Magazine, owns 3-D robotics. His company, founded in 2009, sold 5 million of these not very long after inception.
- Sales. Sales have been growing at 100% per year ever-since. For bigger drones that can handle larger payloads, fly for hours, and "synch" with surveillance systems on the ground, the price is north of $20,000. Delivery companies such as UPS and Fedex might be the ones to use these pricier models. Whatever drone is used, technology is available now, and it is bound to get more sophisticated at lower price points as technical advances and economies of scale kick-in.
- Current drawbacks. As explained above, the main drawback to the commercial use of drones is the law. Unless exempted by the FAA, it is currently illegal to use drones for commercial purposes. And the devices that are available are restricted to operating below 400 feet, roughly the height of a 40-story building.
- Exciting possibilities. As guidelines are being formulated and refined for widespread commercial drone use, the technology will be advancing and marketers will be sure to take advantage of the possibilities. Today, using GPS technology, drones can precisely find locations. And, at the push of a button, they can be sent back home. As the technology gets more sophisticated, marketers can envision a scenario where a buyer can order a product from a local seller. The seller can outfit the drone to deliver the product directly to the buyer - dialing in their precise location at home, work, park or elsewhere. Locations could have mailbox-sized drone ports where drones can land or hover, buyers can take their merchandise once they identify themselves via some unique codes (numeric, eye or finger print), and buyers can press a button to send the drones back to their point of origin. Think of this as an electronic version of Harry Potter's owl, Hedwig.
- Promotional purposes. Of course, marketers can also envision the promotional possibilities where sellers will drape the drones with tastefully crafted branding elements and ads to further inform those along the flight path. The recipient of the goods may also receive on-board brochures, coupons, and special promotions along with the goods they purchased. In this way, goods can be delivered quickly without the expense of paying for gas, and other escalating auto expenses. Additionally, at least at the beginning, sellers can also benefit from the cachet of having a new, hip, cool, and story-worthy way of delivering products.
Another technology that is here today and being rapidly advanced for delivery of products is 3-D printing. Users will be able to order products via the Internet, Smart TVs, and smart mobile devices. A 3-D printer at the ordering location (for those that have one) or at a 3-D printing center (operating similar to a FedEx copy center) will then make the products according to a blueprint, recipe, or software program. Where will the ingredients that are fed into the printer come from? There are many possibilities. They might be (1) already purchased in a traditional way and stored in the home, office, hospital or place of business, (2) loaded into purchased cartridges similar to ink cartridges in an inkjet printer, (3) delivered by drones, or (4) sent through a system of underground tubes similar to the way water, gas, and other utilities are delivered today. Taking this one step further, once products are used, a similar (but separate) tube system can be used to sterilize, recycle, and process any waste.
While this may sound far-fetched, the system of utilities, modes of transportation, and technologies that are commonplace today would be hard to imagine not so long ago. Perhaps the biggest hurdles are not technological. They are more likely political, legal, regulatory, and economic. Municipalities need the vision to invest resources in these delivery and recycling systems. If properly designed and executed, these systems will ultimately pay for themselves in convenience, efficiency, security, and time.
Quantum teleportation a la Startrek
A bit further out on the technology advancement timeline is the concept of delivering physical products by quantum teleportation represented by the famous Star Trek phrase "Beam me up, Scotty." If and when this technology is ever available, which many futurists believe it will be, products ordered from a company at point A can be delivered quickly to point B.
New forms of distribution and delivery are coming
No matter what technologies are employed, there are (and will continue to be) new ways to deliver physical products from seller to buyer. This holds tremendous promise for almost every field of endeavor from the distribution of good-tasting food to the delivery of life-saving medical devices and procedures. Thinking about this future is exciting. Making it a reality is even more exciting. Stay tuned.