From Warehouse to Front Door: Drones Deliver the Goods

Amazon and other shipping services are testing drone delivery. However, just 47% of Americans say they’re interested in the technology, according to a new survey by ReportLinker. 

This weekend, children around the world will climb into their beds, hopeful that Santa Claus will fly his sled across the sky and deliver presents to their homes. In the not-so-distant future, however, it’s likely Santa won’t have the sky to himself. He’ll be sharing it with shipping drones.

More than ever, shoppers are searching online for gifts and shipping them via services such as Amazon Prime, the U.S. Postal Service, Federal Express, and UPS. In turn, these companies deliver packages to residences via planes, trucks and drivers. But Amazon and other shipping services are testing drone delivery, a new component of the freight & logistics industry. Just last week, for example, Amazon delivered its first package via drone in the U.K. The entire process – from customer click to backyard – took just 13 minutes.

UPS also is experimenting with drones to make urgent deliveries in hard-to-reach locations. For example, the service delivered an asthma inhaler to a patient on a coastal island, condensing a 30-minute trip to only six minutes.

But drones aren’t the only new delivery option companies are exploring. Uber recently launched UberEats, a service that uses bicycles to bring food orders from restaurants to customers throughout Tokyo. Starship Technologies, an Estonian company started by two founders of Skype, is now delivering groceries to customers in Washington, DC, using rolling robots that resemble coolers on wheels.
While some companies see drones as the gateway to new business opportunities, others view them as a matter of survival. Uber’s car-sharing service, for example, can’t operate in Tokyo without a taxi license, and the UberEats business gives them a foothold in the city. Amazon is looking for ways to reduce the cost of shipping, which rose by an astonishing 43% in the third quarter of 2016 to $3.9 billion.

And there are competitive reasons as well. Customer satisfaction is a key performance indicator. Keeping it high enables businesses to be more competitive and sustain growth. Because online consumers highly value speedy shipping, it plays an important role in the online shopping experience. When asked to rate its importance, Americans give fast shipping a median score of 6, according to a new survey by ReportLinker. Women, who usually make most household buying decisions, are more likely to rate shipping higher than men. They give it a median score of 7 compared to men, who give it a median score of 5.6.

Shippers have a strong incentive to make customers happy. It’s a crowded market, which means customers can easily switch to another service if they’re not happy. A third of online shoppers said their shipments were delivered by Amazon in the last two months, while 21% said they used UPS. Both the USPS (19%) and FedEx (13%) were used somewhat less often.

Amazon’s popularity is driven largely by its Prime service, which offers shoppers free two-day shipping on anything they buy for $99 a year. The service also includes other benefits, such as streaming music and videosNot to be outdone, Google has entered the shipping market too. However, only 3% of Americans use its service, Express, which also has the lowest satisfaction scores among respondents, ReportLinker says.

Online shoppers say the items they’re most likely to ship are apparel and electronics. Thirty-four percent of women say they ship clothing, while 28% of men say most often ship electronics, says ReportLinker.

[ctt template=”1″ link=”baeX9″ via=”no” nofollow=”yes”]Americans say they’re most likely to ship #apparels and #electronics when #shopping #online [/ctt]
Home delivery is much more popular than shipping to the office, with 85% of survey respondents saying they had items delivered to their homes. Cost and speed are the two biggest factors in choosing a shipping option, according to ReportLinker. Twenty-six percent of Americans cite cost as the primary reason for choosing a delivery service, while 21% say it’s fast delivery. Reliability (18%) and prior experience with the service (15%) are also important factors.

Nearly half of Americans – including 44% of non-users of Amazon Prime – say cost is the main reason they ship via USPS. But if something needs to be delivered quickly, more than a third say they turn to FedEx, according to the ReportLinker survey.

One thing is clear, however: Americans don’t like to wait. Amazon Prime, which offers same-day shipping in some areas, earns top satisfaction scores, with 64% of its users ranking it a 9 or 10, ReportLinker says.

While this may indicate an openness to same-day delivery by drone, just 47% of Americans say they’re interested in the technology. There are exceptions: Men (53%) and younger Millennials aged 18-24 (72%) are much more interested than other groups.

[ctt template=”1″ link=”pQ3k5″ via=”no” nofollow=”yes”]Men and #millennials are more interested in #drone delivery technologies than other Americans[/ctt]

Still, it’s easy to understand why Americans are reluctant to embrace drone delivery. Drones present threats to privacy and safety, and they can be perceived as nuisances. Regulations would resolve many of these concerns, but in the U.S., these issues haven’t been easy to tackle. The U.S. Federal Aviation Administration (FAA) recently issued Part 107, which is a set of rules guiding the operation of drones in the U.S. While this could accelerate investment, the U.S. has a sleepy track record and has been slow to issue rules and guidance. That’s why Amazon began testing drones in the UK first. The country has led the way on developing regulations for commercial drone flights.

However, Part 107 has made it easier and faster to license commercial drone pilots in the U.S. As the new presidential administration takes office in January, the prospects for drone operation may improve. The president-elect wants to privatize the FAA, and if he does, it might expedite a solution for national drone tracking.

Still, the FAA anticipates seven million drones will be in operation by 2020, and Part 107 holds enormous potential for small business owners and entrepreneurs, who see significant business opportunities in drones. Realtors, videographers, and specialized delivery services could emerge. Drones also could be used to fight fires, locate missing persons, and deliver medications to hospitals.

As drone delivery rolls out, it appears the services likely to do best are those handling the shipment of electronics. Twenty-one percent of online shoppers who say they’re interested in drone delivery also say they’re most likely to use it for these types of goods, says ReportLinker. And despite the role drones already play in medical and humanitarian purposes, only 10% of survey respondents say they’d use a drone for such deliveries. In fact, Americans aren’t much interested in having drones deliver food. It ranks third on their list.

However, these attitudes could change. In a recent experiment, the convenience store chain 7-Eleven partnered with drone maker Flirtey successfully delivered orders to a dozen select customers in Reno, Nev. Of course, the drone deliveries included a few Slurpees. But mostly, the items ordered were over-the-counter medicines.

This survey conducted by ReportLinker reached 1018 online respondents representative of the US population. Interviews were conducted between December, 12th and December, 14th 2016.