Amazon and Drones – Are They Nuts? How This Can Work

You probably saw the 60 minutes segment on Amazon with Bezo’s revelation of its drone project.  More recently, Fred Smith said FedEx has several drone studies underway.  UPS has chimed in too stating it has drone research.  Are they all nuts?  No.  Here is why.

During the holiday season, internet purchases were reported to have grown 20+% year over year.  Compounded, that doubles within four years.  Using current methods, could there be a corresponding doubling of delivery capacity by 2017?  Most likely not.  Also, consider the competitive demands for free delivery from Amazon.  Finding a better and less expensive way to deliver small packages has become a business sustainability imperative.

The media coverage for Bezo’s announcement tended towards wide-eyed skepticism.  It focused on the “last mile” problem from the warehouse to the home i.e., replacing the delivery truck.  They got it wrong.

Instead of replacing, think about augmenting.  Jeff said that 80% of the packages are light enough for a drone to carry.  That means 20% of packages still need a delivery truck and person to carry the package to the destination.

What could drones do?  Consider a truck with sides that roll-up to reveal shelves with drones.  The truck stops at a home and the delivery person delivers the heavy package.  Meanwhile, multiple drones emerge, deliver the light packages within a few hundred feet, and return.  If a drone has a problem, the delivery person can help.  Also, the drones could be limited to the lower altitude approved for hobbyists, and mitigate FAA issues.

With the delivery augmentation approach, each stop releases a swarm of drones.  One stop could deliver five packages rather than one.  This would be a huge productivity improvement for a dense, same day delivery route – like packages in suburbia.  Also, customer’s smartphone app could provide the package delivery company a preferred GPS location so your package gets delivered to your deck in the backyard.  In cities where location is three dimensional, a customer specific beacon provided by the delivery company could be deployed on a balcony or fire escape.

Of course, this approach to package delivery requires creation of complex algorithms for issues like when to use, route optimization, sequencing, error correction, failure response, and more.  Amazon has the PhD math scientists to solve these problems – with help from reliability professionals.

For Amazon, the major impediment may be the business agreement with the package delivery service providers.  But, this could be solved with the next iteration of Amazon’s current agreement with the post office.  Then again, FedEx and UPS may want to adopt drones for efficiency and competitive reasons.  The technology is known, and could be deployed.

One recommendation for the Amazon team – stop using the term drones which are known for delivering death in the military.  Use a more friendly term, like humming birds – that is closer to what they sound like.  I’m looking forward to brightly colored humming birds visiting my neighborhood and delivering presents.  You have got to like that imagery!

Comments

  1. Amazon is not the first to talk about this. They probably are the first big company to use media to create hype. Just wanted to get this out first.

    I think several models will co-exist. I do not think there is one perfect answer. If my packet is at the local DC then why wait till truck round. As a user I should be able instruct when and where to deliver the packet. May be by paying little extra I want it delivered at night. Local farmers may deliver fresh produce when you need it. Your local stores/restaurants/fast food may deliver stuff when you need it and where you need it.

    I think once regulation part is taken care of these friendly humming birds will crowd the sky. I am not looking forward to that day. I think the technology will be so cheap that there will not be much incentive to optimize the routes. Send as many birds as you need.