A lot of press has been given to delivery by drones recently and, more specifically, how they may be the savior of the retail customer experience, the enabler of brand differentiation and the solution to the challenge of “last mile” delivery.

While an automated approach, (such as Flirtey), gets commentators excited, what drones could offer is simply another way to deliver goods to customers and a lower cost option for retailers within an already large and evolving supply chain ecosystem. But the key points are that drones won’t be relevant for all retailers, products or customers and retailers will continue to be challenged to create and manage efficient and effective end-to-end delivery networks.

There are numerous start-ups as well as established supply chain companies looking at how to do delivery better. Consider the delivery options that retailers and supply chain companies already provide:

– Standard delivery (including drop shipping) (Apple, Myer)

– Next day (Australia Post)

– Same day (JB Hi-Fi, Edible Blooms)

– Within 3 hours (Instacart, Want It Now)

– Click and collect (Masters, Target, Coles)

– Lockers (Bufferbox, Australia Post, Swap Box)

– Scheduled delivery (My Doorman)

– Crowdsourced (Task Rabbit, Deliv.co, Zipments)

Right now, apart from the fact that they are several years away from existing in any commercial capacity, two of the constraints for adoption of drones are regulation and efficiency (range and payload). The former is varied across regions, with Australian authorities being more open minded with regard to a future with drones. The latter adds another consideration for many retailers, which still struggle with implementing the best fulfillment model.

As with many products and services, for it to become successful the technology will need to improve, become cheaper and scale will be required, but the regulatory bodies will be the deciding factor for whether this approach will take flight and become another part of the customer offer.

But instead of looking at drones as a solution for the apparent insatiable consumer, the bigger opportunity is around network optimisation and demand planning. This means that retailers and their supply chain partners can utilise the right resources and channels, especially during seasonal peaks and campaigns, and better manage the costs associated with fulfilment.

Creating a hybrid fulfilment network is an example of this, whereby dependent on a range of criteria, such as product and order characteristics (size, weight, cost, margin, demand vs forecast, competitor comparison), product availability and location (store, own-warehouse, 3rd party fulfilment centre), customer location and shipping preference, goods can be routed through the best channel at that point in time or allow it to be allocated to future fulfilment schedules.

And this isn’t necessarily too far-fetched or unrealistic. Amazon has recently had a patent granted for creating a delivery network that anticipates demand. But regardless of when it becomes operational, it indicates how a variety of shipping options can address the varied needs of order fulfilment.

Though everyone is excited about a future where drones deliver direct to customers, we shouldn’t only be looking to the skies.

 

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Emmanuel Churchley

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