In theory, getting a recent purchase delivered in mere minutes is every consumer’s dream.
In practice? It’s not exactly easy to do.
The logistics are complex and intense. The regulatory hurdles are steep and covered with red tape. And like autonomous vehicles, the technology is already capable of the task at hand – however, it will take time to build acceptance and trust with customers to allow drones to fly onto their property for any purpose.
These Are John Buckingham’s Stock Picks For 2021
The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor. Q4 2020 hedge fund letters, conferences and Read More
Check out our H2 hedge fund letters here.
Today’s infographic from Raconteur shows that although the obstacles of drone deliveries may be plentiful, the potential benefits to retailers are too good to pass up.
Amazon, for example, made more than five billion deliveries to Prime customers in 2017, and a conservative estimate of the company’s shipping costs is at the $20 billion mark for last year. That means anything that can hack away at logistical costs would be very welcome for Amazon and other shippers, and drones could be a way to accomplish this.
Commercial drones can travel at up to 100 mph and deliver goods under 5 lbs (2.3 kg) – and according to ARK Investing Group, potentially each trip could occur at a low cost of $1 per shipment.
Even better? Faster shipments could mean higher revenues. After all, 86% of abandoned carts online are the result of expensive shipping costs, according to management consulting group McKinsey & Company.
Investing in Drone Deliveries
Which companies are putting their money into drone deliveries?
There are a few key examples:
Amazon, of course, is the best known one. The online retailer is testing Amazon Prime Air in several international locations to get goods to customers in 30 minutes or less.
UPS has also estimated that cutting off just one mile for the routes of each of the company’s 66,000 delivery drivers would amount to $50 million in savings. For this reason, UPS is testing drone deliveries, using the top of its vans as a mini-helipad.
Domino’s famously delivered the first pizza by drone in 2016 to a New Zealand couple. The pizza company says that drones will be an essential part of its future delivery operations.
Article by Jeff Desjardins, Visual Capitalist