Food has, quite literally, dropped (gently) from the sky in various parts of the world with the help of drones.
Unmanned aerial vehicles have delivered burritos, pizza, a frozen Slurpee beverage and more to hungry consumers as tests aimed at demonstrating how drones and e-commerce belong together.
Domino’s Pizza Enterprises Ltd. in November delivered two pizzas via drone to a suburban area near Auckland, New Zealand. The process involved an autonomously controlled drone—a drone that pilots itself based on GPS navigation and other sensors—from drone delivery service Flirtey. Drone experts and a drone pilot oversaw the delivery to ensure the self-navigating device operated properly. Domino’s says it plans to expand drone delivery to other parts of New Zealand in
2017 and that the service addition will create jobs because it will need more employees to handle drone orders and fleet management. “We invested in this [Flirtey] partnership, and technology, because we believe drone delivery will be an essential component of our pizza deliveries,” says Don Meij, CEO and managing director of Domino’s Pizza Enterprises, which is a Domino’s Pizza franchisee.
Flirtey’s drone will help Domino’s make “safer, faster deliveries to an expanded delivery area, meaning more customers can expect to receive a freshly-made order within our ultimate target of 10 minutes,” Meij says. “[Drones] can avoid traffic congestion and traffic lights, and safely reduce the delivery time and distance by traveling directly to customers’ homes. This is the future.”
But how far in the future?
Several retailers—mainly in the food sector for now—and executives running drone companies think it’s sooner rather than later for drones to start delivering online orders. Testing delivery by drone is underway in such countries as the United States, the United Kingdom, Canada, New Zealand, Singapore and Switzerland.
Experts and a new report from consulting firm McKinsey & Co. say rising consumer expectations for faster and more on-demand delivery choices will drive drones as delivery options in the next decade, but the biggest questions center on regulatory matters involving safety and reliability of the drone systems and devices needed for delivery to consumers. Companies such as Amazon.com Inc., Google, Drone Delivery Canada and Flirtey, and governmental agencies throughout the world are pushing the matter, though at varying speeds.
More than a year ago, Singapore Post Ltd., Singapore’s postal service, used a drone to deliver a packet containing a T-shirt and a letter. SingPost worked with a government agency to develop the drone used in the October 2015 delivery, and in November 2016, SingPost launched its Centre of Innovation that includes initiatives involving last-mile delivery options and experimenting with drone delivery of e-commerce orders across the island.
Mail services such as Switzerland’s Swiss Post and SingPost are several steps ahead of the United States on drones because they are quasi-governmental agencies that receive support for research and development, says Gerald Van Hoy, an analyst at Gartner Inc. who specializes in drones and technology. Also, these businesses operate in geographic locations where drones make sense, such as remote villages in the Alps or dense jungle areas in Singapore, he says.
In the United States, the Federal Aviation Administration in late August approved broad regulations that permit daytime commercial drone flights within line of sight, no higher than 400 feet, no faster than 100 mph and, generally, not above people. Those rules aim to eventually allow night flights, operations over populated areas and service beyond line of sight. The agency expects to introduce those rules next year. “There is a process in place with the new regulations to get waivers,” Van Hoy says, and some of the tests being conducted stem from such waivers.
“The FAA is all about safety. It wants to see a model for safety, and if a proposal has that it’s more likely to grant an exemption or waiver,” Van Hoy says. However, being able to test and operate outside the line of site of a drone operator or controller is “the holy grail,” and the FAA will require a system that can handle what-ifs. “There is no foolproof system, not even with airlines, but the FAA wants to reduce risk as much as possible,” he says.
Some companies aren’t waiting on the FAA.
Amazon, which has said for more than 18 months that U.S. regulations are too strict and hampering advancement, turned to the English countryside to test delivery by drone in early December. A custom-built quadcopter delivered an online order of an Amazon Fire TV device and some popcorn onto the lawn of a home that sits within a zone that U.K. aviation officials have designated for drone test flights. Amazon declined to comment on its drone plans beyond referring inquiries to its website for Amazon Prime Air, which features a video of its U.K. delivery. Van Hoy says he expects Amazon, with its robotics division and investment, to be the first retailer to use drone delivery on any kind of scale in the United States, but such retail trials are not likely until 2019 or 2020.
In late November, Drone Delivery Canada and office supplies retailer Staples Inc. announced a collaboration to develop and test commercializing drone delivery as part of Staples’ logistics platform. The drone firm also is working with NAPA Auto Parts. “Our challenge is figuring out how to build a business in a way that the government will allow you to operate,” Drone Delivery Canada CEO Tony DiBenedetto says.
“We spent a lot of time speaking with our federal government and listening to them carefully. We’re building a platform around what they foresee and anticipate as requirements,” he says. “We’ve commenced the process and we got the first flight certificates from Transport Canada.” Transport Canada is the federal institution in Canada responsible for transportation policies and programs. Testing is underway with a goal of being able to offer commercial delivery by drone in 2018, DiBenedetto says.
Bring out the drones
Consumers are open to the idea of receiving package deliveries via drone.
A January 2016 report by shipping and fulfillment software platform Temando found that 33% of U.S. retailers were willing to use drones to deliver their packages and 51% of consumers were willing to accept drone delivery. Temando’s survey polled 214 retailers of all sizes and more than 1,000 consumers about a range of shipping-related challenges.
“Parcel delivery: The future of last mile,” an October report by McKinsey & Co., stated 60% of consumers are in favor of, or at least indifferent to, drone delivery. The survey involved more than 4,700 respondents in China, Germany and the United States (more than 1,500 in each country). The survey also found 70% of consumers prefer the least expensive form of home delivery, 23% are willing to pay extra for same-day delivery, 5% would pay for timed delivery and 2% would pay for instant delivery.
Driverless vehicles with parcel lockers in which to transport online orders, drones and bike couriers are likely to dominate last-mile delivery in about 10 years, with automated devices accounting for nearly all of deliveries to consumers; bike couriers will handle a sliver of the market that involves instant delivery in highly dense areas, according to the McKinsey report. Same-day and instant delivery will likely reach a combined share of 15% of the market by 2020, and those methods are likely to “significantly grow further beyond this date” if the service is extended to cover rural areas, the report states.
Drones are “surprisingly cost-competitive” in rural areas, costing about 10% more than current delivery models, the McKinsey report says. Drones’ high speeds make them ideally suited for same-day and time-specific delivery of smaller items in rural areas. However, drones currently are limited by their ability to transport parcels weighing less than 11 pounds and their large size, which requires landing areas of nearly 22 square feet, the report says. It is expected that drones will, within the next 10 years, be able to handle packages of about 33 pounds.
Gartner’s Van Hoy says true business-to-consumer delivery from a drone is at least three to four years away because, while it’s conceivable to use a drone for delivery, today’s drones generally don’t store enough energy to make round-trip delivery journeys.
A more likely scenario for widespread drone use, initially, will be on a business campus or for the delivery of a mechanical part for a vehicle or machine that needs repair. “Say a driver goes to a remote site and something breaks or a part was forgotten. Have a drone deliver it. It’s not imperative that the drone return to its original spot. It could come back with the driver,” Van Hoy says. On a business campus, a drone can deliver parcels from building to building and then refuel on-site before its next delivery, he says.
Autonomous vehicles such as drones or driverless cars are poised to help cut costs and improve efficiency and customer service, especially on the expensive final mile of delivery, says Tom Caporaso, CEO of e-commerce platform provider Clarus Commerce LLC, which owns FreeShipping.com, a service for which consumers pay a monthly fee to get free ground shipping from about 1,000 participating retailers. “Regulations are the biggest hurdle, but there is rapid innovation around drones and drone delivery,” he says. “And there is awareness that it’s coming. The technology becomes more real every day, and I think [drone delivery] systems will be in place in three to five years.”
Drone Delivery Canada’s DiBenedetto says the biggest challenge is not the drone hardware but the platforms on which drone delivery operate. “The systems have to work together. The [drone] systems have to communicate back to retailers, to regulators for air traffic control and talk back to the fleet of drones,” he says. “If we don’t have proper systems that manage operations, the government won’t let us do it. It’s all about safety for the government. There’s a right and wrong way of doing it. We’re taking baby steps right now.”
Retailers buzzing about drones
Check out these other examples of delivery by drone
Convenience store chain 7-Eleven Inc. and drone delivery firm Flirtey paired up in July to make two merchandise deliveries to a customer’s home in Nevada. The deliveries included Slurpees, hot coffee, doughnuts, a chicken sandwich and 7-Eleven- branded candy. The goods were packaged in a specially designed delivery container and flown using an autonomous GPS system to land in a family’s backyard.
Flirtey worked with the Nevada Institute for Autonomous Systems for the delivery and has the support of officials in Nevada, which has an FAA Test Site designation. “This is just the first step in our collaboration with 7‑Eleven,” Flirtey CEO Matt Sweeney said in July. “Flirtey’s historic drone deliveries to date have been stepping stones to store-to-home drone delivery, and today is a giant leap toward a not-too-distant future where we are delivering you convenience on demand.”
Project Wing, a unit of Google’s parent company Alphabet Inc. that is developing drone technology, in September launched an experimental service, approved by the FAA, to deliver burritos from Chipotle Mexican Grill Inc. on the Virginia Tech campus in Blacksburg, Va. Project Wing uses self-guided hybrid drones that can fly like a plane and hover like a helicopter. The drones hover overhead and lower the burritos with a winch.
Project Wing, which did not return requests for comment for this story, appears to be undergoing changes.
A partnership with Starbucks Corp. ended in November, according to sources that spoke with Bloomberg News, after disagreements about the access to customer data that Alphabet wanted. Project Wing’s budget has shrunk as part of overall budget tightening across Alphabet, and Wing’s leader, David Vos, left in October. The drone unit also was in talks to provide suburban grocery delivery in Ireland, which has less-stringent air traffic rules than the United States, according to Bloomberg, but the status of that plan is unknown.
Wal-Mart Stores Inc. flies small drones for inventory tracking inside its warehouses and drones collect data via RFID tags inside each of the semitrailers parked outside, Gartner Inc. analyst Gerald Van Hoy says. Once regulatory issues are hashed out, it won’t be a big leap to have drones flying from Wal-Mart fulfillment centers to stores, he says.