Drones, driverless deliveries and robots — what’s the future of humans in e-commerce delivery?
The thought of a robot, drone, or autonomous car delivering packages at your doorstep gets everyone excited. After all, who doesn’t want to experience the Jetsons life?
So, is that possible? The answer is yes and in the imminent future. However, to get to that point where, as PwC puts it, ‘physical internet’ becomes commonplace, there are several technological and regulatory hurdles to be crossed.
Companies such as Amazon, Uber and UPS have been at the forefront of not just surpassing these challenges, but also innovating and testing drone deliveries to ensure that they are fully autonomous, regulatory approved and insured in the near future.
The rise of physical internet
The interest in robots, drones and driverless vehicles in e-commerce is born from the rising cost of last-mile delivery, which accounts for 30%1 of the total delivery cost. In some cases, it goes as high as 50%1.
Last-mile deliveries are the most expensive aspect of e-commerce, and firms are continually looking for solutions to bring these down. This challenge is also increasing as the volume of e-commerce is growing around the world, with more people getting connected to the internet.
At the same time, 70%1 of customers are price-sensitive, preferring the cheapest delivery option; while also demanding lower delivery costs. Before the launch of Amazon Prime, or even Amazon itself in the UAE, Souq.com charged AED 10 for the delivery of almost every individual item that was priced below AED 100. This saw many customers simply not go through with orders. And while that is still the case for products not available on Prime, at least there is an option to customers.
The other 25%1 of the audience are willing to pay extra for instant or same-day delivery, evident from the number of people having Amazon Prime membership. But then again, the pressure on faster deliveries squeezes costs.
The advancement and availability of working robots, drones and driverless cars for e-commerce delivery do not mean they are feasible at present. The technological infrastructure and regulation are the biggest hindrances in the quick deployment of these physical internet solutions.
For example, while delivery robots can navigate and handle curbs and steps, a slight bump in the road, a stone in the way or wet roads can cause accidents whereby the robots can topple over. How do they get back up and continue deliveries? When it comes to driverless cars, they need strong 5G signals coupled with advanced artificial intelligence. Even as the UAE is one of the readiest countries for autonomous cars, the infrastructure and regulation to make driverless cars safer are still in the works. It’s the same case for drones as well.
Moreover, while physical internet solutions are praised to be more efficient than humans, they can be a lot slower in moving from one place to another and cannot deal with last-minute challenges as well as humans can. For example, if a person is not at home at the time the robot or driverless car arrives, the possibility of having a call with the customer and figuring out a solution is gone.
The future of physical internet with humans
The fact remains that although humans are expensive for last mile delivery fulfilment, their ability to handle challenges is far superior. The best-case scenario is for humans and robots to work together, complementing each other’s strengths and weaknesses.
Ultimately, growth, increase in living standards and overall societal impact are factors that we, as a society, should be aiming towards through technological advances. As David Abney aptly puts in his online blog, “UPS is evaluating whether drones could be used to augment our traditional fleets in certain situations. For example, we could see drones being employed to deliver medicines and other critical supplies for humanitarian relief operations, where natural disasters often wipe out roads and other infrastructure.” So, if we look beyond the present situation into what the future holds, the sky is literally the limit.
1 Mckinsey report: Parcel Delivery - The future of last mile