Drones debunked – for now

There has been much talk about drones buzzing across the skyline and delivering our purchases within hours becoming the next fundamental shift in the last mile delivery – potentially removing courier issues, missed deliveries, and providing exemplary customer service. In fact, some delivery companies and retailers (DPD, 7-Eleven, Amazon) are already delivering their parcels using drones.

However, it’s likely to be at least a decade before drones can even be considered as the optimised or affordable option. This is because there are some key considerations, as described below, which will limit their use as a mass market delivery tool – leaving them as a high-end ‘niche’ service.

Drone vs human deliveries

Amazon is considering delivering small parcels by drones, which is currently done by a third-party delivery company. Each van driver delivers 80-120 parcels a day via a ‘milk round’ route. Amazon’s drone solution will only take one parcel per delivery. We estimate you would need at least 10 drones to deliver 120 parcels (a typical driver’s load). So, the benefits of lower operating costs from fewer employees would be negated by the large upfront capital costs. 

Physical Delivery

The video of an Amazon drone dropping a parcel in a customer’s back garden shows how convenient this customer centric service is. However, the requirement for the drone drop zone to have at least 30 feet of clearance will be a big obstacle in the UK. Even without the clearance issues, it will rule out customers in apartments or built up areas. These limitations will reduce the market potential for deliveries.

Drone deliveries could be a boon for outlying regions, but the capital investment to build the large number of drone depots required would make this extremely unprofitable.

Risk

Delivery firms will need to mitigate the risks should there be a mechanical fault or adverse weather. Also, pets, children and even the occasional irresponsible adult could easily get within the danger zone. Mitigating these risks could lead to large landing zones, restricted areas, roof top bays, or parcels dropped from a height into nets. 

Additionally, these deliveries will attract some attention from hackers or thieves looking to steal the equipment and/or parcels.

Supply chain

More warehousing will be required with drone depots attached. For instance, 16 depots would cover London and six would cover Birmingham (not including no-fly zone restrictions). With each of these being a stocking point, there is a lot of additional capital required for stock. The significant upstream requirements to re-supply many locations would put a substantial strain on their current infrastructure not to mention huge additional operational costs.

Technology

Although technology will improve, we’re at least ten years away from it being enough to make Amazon’s delivery vision a reality.

In addition, the practical and physical hurdles outlined above are not going to change any time soon. Despite the potential for a best-in-class delivery proposition, the reality is that consumers are not going to ring-fence a part of their garden to receive washing powder within an hour.

Ultimately, Amazon can’t make this profitable and/or viable for the mass market any time soon. It is a good technological test bed but is nothing more than a niche service.