Dive Brief:
- Though drone production for both personal and commercial purposes is growing, with an expected sales of $6 billion or more in 2017 and $11.2 billion by 2020, delivery drones remain locked in logistical nightmares involving turnaround time after delivery, Materials Handling and Logistics reported last week.
- Therefore, drones are expected to constitute just 1% of the commercial market by 2020, rather than the dominating presence some predict, per a Gartner analysis. However, case studies show drones do have a cost and time-saving potential.
- Thus far, commercial drones best serve industrial inspections, primarily in oil, gas,energy, infrastructure and transportation, where regulations have less of an impact. Gartner predicts drones will first be deployed for business-to-business applications or internal purposes.
Dive Insight:
It's easy to understand the appeal of a drone, with its capacity for usefulness in obscure locations, such as in delivering medical supplies to Rwanda, or in retail, where initially it seemed that drones were the answer to last mile delivery challenges. In fact, as recently as December, both 7-Eleven and Flirtey were touting the success of their drone delivery endeavor, wherein participants received small deliveries from a local convenience store.
Reality has proven more challenging, however. Privacy laws and weight limits, which once seemed easy to resolve, have since impacted predictions of their usefulness. In the U.S. population density is a major inhibitor, and laws protecting privacy are unlikely to change anytime soon.
Gartner may predict a slow uptake of the technology, but companies are still betting on its promise. Amazon, UPS and Daimler are working to develop drone technology for the last mile, in hopes of future permissibility. Like self-driving cars, regulation may catch up once the technology proves its commercial worth.
