Amazon’s same-day package delivery using drones to revolutionize the e-commerce industry

Posted by MarketsandMarkets on Jun 27, 2019 5:23:12 PM
MarketsandMarkets

On June 5, 2019, Amazon showcased the latest version of its Prime Air delivery drone—that is set to transform last mile package delivery—at the Mars Conference in Las Vegas, US. The Prime Air delivery drone is a hybrid aircraft equipped with optical, thermal, and ultrasonic sensors. Moreover, the drone is also capable of vertical takeoff and landing along with continuous forward flight.

MarketsandMarkets™ Viewpoint

Amazon is an e-commerce giant that has spread its presence to almost all major parts of the world and holds the maximum market share since the last few years in the industry. The company is known for providing an online platform to vendors and customers for selling and buying goods. Amazon has a presence in more than 15 countries and provides e-commerce, analytics, and web and technology products and services.

IMPACT ON AUTONOMOUS LAST MILE DELIVERY MARKET

The use of Unmanned Aerial Vehicles (UAVs) and Unmanned Ground Robots (UGRs) has gained much traction in recent years, driven primarily by significant investments from stakeholders and the reduction in delivery costs in last mile deliveries. Other factors include collaborations among government bodies with industry stakeholders for the development of an unmanned last mile delivery ecosystem. To ensure successful development and implementation of such an ecosystem, a cloud-based network would be required to ensure the safety of the drones as well as the packages being delivered by them. The cloud-based network will be able to collect data from drones and analyze it to make sure they do not crash into each other or buildings and other properties. The data analysis will also help determine the most optimum route for efficient package delivery. Amazon plans to automate the last mile delivery process by leveraging its autonomous delivery drones for business-to-consumer service.

Some of the key last mile aerial delivery drone manufacturers are Amazon Prime Air (US), Drone Delivery Canada (Canada), Matternet (US), Skycart (US), Skysense (US), Zipline (US), Flytrex (Israel), Uber (US), Airmap (US), Workhorse Group (France), and Alphabet (US), among others.

The drone industry has witnessed numerous technological advancements over the years in terms of system and payload capabilities. Research and development (R&D) activities in the field of software technologies and data analytics used in drones have enhanced the design of UAVs over the years. R&D has also led to changes in the size, endurance, power, and propulsion system of drones, while developments in computer vision and machine learning technologies are expected to enable UAVs to become autonomous delivery bots.

FIGURE 1 DRONE LOGISTICS AND TRANSPORTATION MARKET IS EXPECTED TO GROW AT A CAGR OF 21.01%

Drone Delivery

Source: MarketsandMarkets™ Analysis

These autonomous delivery drones will be able to carry payloads or packages such as food, medical supplies, or postal & packages for last mile delivery. Modern drones can transport payloads up to 2 kilograms over up to 20 kilometers autonomously. Companies adopting last mile aerial delivery solutions will need hundreds of drones to fulfill the demand from their customers along with supporting infrastructure such as charging stations, vertiports/landing pads, and ground control stations equipped with sophisticated software suites.

Amazon understands the untapped market potential that can be captured by increasing the number of package deliveries and shortening the logistics chain, which can be achieved using unmanned autonomous platforms. Another vision of Amazon is to automate the complete delivery system by establishing micro-fulfillment centers or partnering with local vendors for quick delivery. Amazon is very optimistic about the use of autonomous delivery drones and has invested USD 800 million to get one-day Prime delivery off the ground.

According to MarketsandMarkets, the drone logistics and transportation market is estimated to be valued at USD 11.2 billion in 2022 and is projected to reach USD 29.1 billion by 2027, at a CAGR of 21.01% during 2022 to 2027.

IMPACT ON TOP COMPETITORS

The market for autonomous last mile aerial delivery is in a very early stage with a handful of manufacturers present in the market. Some of the indirect competitors of Amazon such as Wing, a subsidiary of Alphabet Inc., has an operational last mile delivery solution for food delivery in Australia. Zipline, a US-based company, has been successfully delivering medical supplies to remote areas in Africa since the past few years and is now planning to enter into the US market. Uber is planning to enter into the drone delivery with plans to initiate a pilot program offering fast food drone delivery in San Diego, California.

CONCLUSION

The autonomous last mile delivery market is in its early stage and is expected to grow significantly in the near future. With Amazon investing significantly to make same-day delivery plausible, last mile drone delivery is expected to commercialize on a greater scale soon. Players providing last mile aerial delivery for applications such as postal & packages, medical supplies, and food delivery are expected to soon capture a significant market share in the autonomous last mile aerial delivery market.

The market also presents several growth opportunities for drone manufacturers due to the increasing demand for drones in the logistics & transportation industry. Stringent regulatory challenges, along with operations in populated areas creating safety issues, are some of the factors restraining the use of aerial drones for last mile delivery.

Topics: Aerospace and Defence, Unmanned Aerial Vehicles, Unmanned Ground Robots

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