What is the Future of Drones at Retail?

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What is the Future of Drones at Retail?

By Jim Dempsey - 10/05/2020

In the past few years, the adoption of drone technology has risen significantly, with analyst firms like Frost & Sullivan expecting drone adoption to continue growing from 2.44 million units in 2019 to 2.91 million units by 2023. One industry that has capitalized on this momentum is retail as companies like Amazon and Walmart begin to test drone delivery services to fulfill orders and improve last-mile deliveries.

Today, most of the drones used in retail are augmentation robots, controlled by their operators on a mobile device. While drones are starting to be used inside the warehouse for inventory management purposes, some companies are investigating how this technology might be able to improve other operations in the warehouse.

Sorting or picking applications, for example, that are traditionally labor intensive and error-prone are being looked at. As the technology matures, retailers will find new and innovative ways to utilize drones to improve operations and ultimately customers’ experiences.

Creating a Seamless Supply Chain

Retailers typically utilize drones in two ways. On the supply chain side, retailers use drones for inventory management to optimize yard and warehouse operations. Drones can scan through aisles to access inventory information faster and more accurately than the human eye.

Out in the yard, drones can keep track of the location of containers to help warehouse workers gain visibility and better control over yard equipment. This can help improve logistics like dock scheduling while reducing package loading/unloading times.

Outside of warehouses, retailers are beginning to engage autonomous drone technology for last-mile deliveries — usually the most expensive element of a retail supply chain. To drive down costs and answer customers’ demand for near instantaneous deliveries, some companies are starting to outsource their last mile services to third-party carriers instead of using traditional carriers like FedEx, UPS or USPS.

Combined with mobile applications, drone technology provides traceability and allows better scheduling, which will result in less incorrect deliveries and delays that negatively impact a customer’s overall shopping experience. As a result, more retailers are upgrading their transportation management systems to aid in the efficient execution of the last mile.

Enabling Contactless Retail Experiences

While drone technology is still fairly new, it will become more mainstream for deliveries in the coming years. The current COVID-19 pandemic has challenged retailers to adapt to customers’ changing needs more quickly and has put an increased focus on the value of contactless delivery. This opens up a massive opportunity for retailers to utilize drone technology.

Big-box retailers that have the ability and budget to build, maintain and operate a fleet of autonomous drones can create a competitive drone network while smaller retailers can rely on a third party drone provider. With either route, retailers can integrate drones into supply chain operations while addressing customers’ health and safety concerns. This enables retailers to better manage transportation costs while increasing visibility into each step of a package’s journey.

Jim Dempsey is a director at Panasonic.