Retail in a drone era

When most people think of drones, they might think of unmanned military strikes, or of the toy drones. But the fact is, drones are already used for a number of complex tasks across many different industries. First responders and disaster workers use them to help spot and aid stranded victims. Walmart has applied for over 46 patents involving drone technology. In March of 2018, UPS and Amazon were both reportedly researching ways to make drone delivery a reality, with Amazon securing patents for their Amazon Air Prime service.2 While the logistics still present challenges, it’s clear that the potential for drone capabilities is growing by the day.

Drones as part of retail’s technological evolution

To get a feel for how drones might disrupt the status quo in retail, think of how the advent of e-commerce, smart phones, and digital wallets have forced paradigm shifts in the way we research and buy. The research and purchase phases of the retail buying journey no longer consist of going to multiple brick-and-mortar locations to review options and make a purchase. Instead, we make a few keystrokes or taps, use automated tools to comparison shop, and buy with our facial scan or fingerprint with our digital wallets – the where, when and how of these phases is completely within the customer’s control.

Delivery is ripe for a similar transformation, and drones have the power to deliver it… along with a host of potential benefits for consumers and the industry:

• Faster delivery: When brands rely on humans to complete deliveries, they’re dependent on the hour’s employees are willing to work, traffic congestion and numerous other factors. Drones could help speed delivery by being able to be dispatched at any time of day, without being reliant on traffic patterns and roadways.
• Improved accuracy: By employing drones to pick and fulfill merchandise, brands have the potential to reduce human error and ensure faster more accurate order fulfillment.
• Reduced HR costs: By supplementing or replacing human labor with drones, retailers could greatly reduce overhead related to salaries, benefits, and other labor-related costs.

Where to start?

Like all new technology, the drone revolution has to start somewhere. A likely starting place is last mile delivery. Retailers have a true opportunity to differentiate themselves in this space with drone technology; medium-to-large-sized companies can use drones to deliver food and other goods instantly within a particular trade area. Or take tech start-ups like Robomart, which employ autopilot-based technologies to bring the shopping experience to consumers (in the case of Robomart, in the form of produce, baked goods and other groceries that consumers can browse and buy without having to set foot in a brick-and-mortar store). Similarly, brands like Uber Eats, Walmart and Amazon are looking into ways that drones can improve their last mile delivery operations.

What does this mean for brick-and-mortar retailers?

A clear lesson to be learned from earlier retail evolutions is that it does no use to oppose the coming changes. As the saying goes, you can’t change the waves, but you can learn to surf. So how does retail brick-and-mortar learn to surf? By being ever smarter about how they build and use new locations.

In the new world of drone-based fulfillment, it’s likely that most retail locations would function as warehouses and bases of operations for last mile delivery. However, it’s also likely that many would need to retain a small portion of stores for late adopters who will remain touch-and-feel shoppers. To remain competitive, brands will have to choose the locations for each type of operation strategically to optimize both types of fulfillment. Companies can also use existing customer data to gain strategic insights into how customers shop by service and market and then use those insights to optimize their fulfillment centers accordingly. By relying on A.I.-powered location intelligence platforms like SiteZeus, retailers will be able to ride the next wave of delivery and fulfillment, no matter what form it takes.