LAST-MILE DELIVERY SOLUTION?
Will drones stop flying under the radar and become the next big thing
Technological advances of the 21st century immensely help in every aspect of modern business and provide solutions that improve the efficiency of many companies.
With the fast development of logistics and its ability to provide answers to increased demand, both in terms of volume and speed as well as safety and accuracy of delivery, new technologies are being considered as a natural next step.
The widespread use of drones for last-mile delivery has never seemed more possible.
As complex as chains and logistics networks are, last-mile delivery has proven to be the most expensive part of the whole distribution process. With respect to the total distribution cost, it ranges from 13% to an astonishing 73%. Fashion lies on the higher end of this spectrum.
Cutting costs to increase profit is one of the things the industry is famous for.
Development of global trade, more sophisticated banking, and fast logistics made moving production to countries like China, Bangladesh, Vietnam, and India a viable possibility - and soon after a reality. The majority of garments are produced at a meager cost by outsourcing labor in said countries and paying workers below minimum wage.
The nature of procurement and delivery costs allow companies to save even more, bigger quantities of clothes being produced mean a higher volume of items being ordered. Economies of scale save the day (and money) for every brand that is able to take advantage of it.
Unlike procurement and delivery, storage costs rise as the number of items ordered increases. For most stores, it does not cause too many problems due to proportionally high sales. Software and algorithms track customer behavior, providing the needed information on stock rotation to companies, and ensuring the lowest amount of loss in all segments of the business.
Now they are left with a problem, what to do about the last step of the way and how to cut costs there?
The rise of e-commerce has put even more pressure on companies to offer their customers fast, high-quality delivery, which has become a big point of diffraction. Customers are more likely to order from stores offering free or low-cost delivery, faster shipping, and additional services (e.g. tracking, customer support).
Nowadays, most (if not all) of those deliveries end up on our doorsteps thanks to the postal and similar delivery company’s employees and their trucks, vans, or cars. But it being the most widespread way of doing things does not mean it’s without faults.
The capacity of a delivery vehicle, its ability to navigate through areas of high density as well as the environmental impact need to be taken into account. Limitations and delays are just some of the problems being faced on a daily bases, taking a toll on overall efficiency.
In recent years we might have stumbled upon a solution. Some companies, like Amazon and FedEx, are already looking into using drones as a new way of getting the product to the end customer.
Drones allow the possibility of delivery to even the most remote locations - whether we are talking about a small island or a house in the middle of a field, this way of delivery does not require additional infrastructure (bridges, roads) to be built.
Consumers are, now more than ever, used to life being fast-paced and need their products as soon as possible, when time is of the essence drones lead in the race between vans, trucks, and cars according to VVA’s report.
Not only does drone delivery take less time, it also leaves time for employees to focus on more important tasks at hand - helping in the distribution center when they would have been stuck in traffic. Drones also have lower CO2 emissions and businesses stop becoming so dependent on fuel, cutting costs in that department further.
Some companies are still on the fence, and rightfully so because unknown sides of implementing drones still exist.
Even though they do not need actual roads to deliver products, drones need navigation and systems to be placed in order to safely fly. Educating current employees, or finding new ones, may not be a possibility for smaller retailers and companies. Their budgets simply do not allow experimentation and could not take more than one try at switching their delivery methods. Those businesses would rather wait for bigger ones to perfect the usage of UAVs and enter the new delivery market when risk and cost lowers.
If the business cannot put aside a significant amount of money to invest in drones, trying to branch out into new technologies might make the cost of delivery higher for the end consumer to make up for lost profits.
Increasing the price of delivery could result in fewer sales, putting off both customers and businesses from even giving it a try.
Even though our packages dropping from the sky sounds like a distant future, it just might be the game changer companies were waiting for.
Entry costs are somewhat higher compared to vans and similar vehicles but the end number of deliveries is much higher, and the time needed to fulfill them lower, instantly making the companies using them stand out in the sea of competition.
When it comes to fashion, being able to cut such a huge cost and possibly get rid of the middle man could save from 20% to even 50% of additional cost per product (after production).
People can be especially eager to receive their orders when it comes to clothes, shoes, and accessories and in some cases would be willing to pay extra for same/next day arrival, helping companies in the fashion industry to fund their attempts at making drones work for them.
Bigger companies leading the way, making different kinds of deliveries more affordable, and setting the new standard will give the needed push to others while also making it more accessible.
Thank you so much for taking the time to read this! I would love to hear your thoughts too!
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