KEY POINTS

  • Drone delivery offers tremendous benefits in the form of cheaper, faster shipping. In particular, drone delivery can help companies smooth the incredibly time-consuming and expensive “last mile” of delivery, the last leg of a package's journey before it reaches the consumer.
  • A wide range of companies are testing drone delivery to learn how they can leverage those benefits. These include e-commerce companies, legacy retailers, logistics providers, and tech firms.
  • There are two main types of drone delivery these players 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.
  • However, there are significant regulatory and technology barriers that will postpone mainstream adoption of drone delivery until after 2020Barriers include regulatory hurdles, consumer acceptance, and technical issues related to ensuring safe and reliable delivery by drone. 
  • 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.

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Introduction

Drone adoption is rising fast among both consumers and companies, and the retail industry is just one of many exploring new uses for the technology. Drones could serve different purposes for retailers, but the most well-known application is clearly delivery by drone, with some of the biggest names in tech like Amazon and Alphabet touting it as the future of e-commerce fulfillment.

Many major retail and logistics companies around the world are testing delivery drones, looking to solve daunting challenges in e-commerce fulfillment, particularly related to the “last mile” of delivery. This last mile — the last leg of the journey when orders reach the customer’s doorstep — is the most expensive and inefficient part of e-commerce logistics. 

  • Drones can help companies circumvent many of the issues plaguing last-mile delivery today — like traffic congestion in cities and long distances between rural deliveries.
  • Circumventing those problems would cut shipping times and costs. 
  • Retailers could then offer faster and cheaper shipping by passing the savings on to customers, helping to boost sales and customer satisfaction.

Still, the barriers to deploying drones for last-mile home delivery are extremely [...]