Thursday, February 18, 2016

The Economics of Drone Delivery

Over the last few years the new big thing in technology are drones. According to Flexport, in an article called “The Economics of Drone Delivery” the future of delivery is looking to drones as the cheaper modem of delivery.  Drones will provide a quick, cheap, and efficient delivery of products for many leading companies like Amazon and Wal-Mart.
            One idea that the article does a great job at emphasizing is the fact that Amazon has designed this drone system to deliver products to customers within thirty minutes. This could put Amazon drastically above other competing companies because currently a thirty-minute delivery system is unheard of. Customers who need products immediately would turn to Amazon if they were guaranteed that quick delivery and leave their former suppliers. One concern was whether companies like Amazon and Wal-Mart would be able to make this quick delivery considering not every American lives near one of these stores or warehouses. However the article states, “As for distance, Wal-Mart has noted that 70% of Americans live within 5 miles of a Wal-Mart”. This is huge in drone delivery because it would allow Wal-Mart to quickly, easily, and efficiently deliver products to customers through this system.
            Another concern is how companies like Amazon and Wal-Mart would deliver such large and heavy packages to customers through the drone delivery system. However, the article also states “In official documents, Amazon has written that 86% of its packages weigh less than 5 pounds”. Particularly, for Amazon weight is not a huge concern when considering whether or not drone delivery will be possible. Yes, Amazon still has 14% of its packages that are over five pounds but eighty-six percent is still a huge number and would definitely make drone delivery possible.
            In addition to delivering packages for companies such as Amazon and Wal-Mart, drones could make an even larger impact. After the earthquakes that occurred in Haiti, drones were used to deliver essential supplies and food to the Haitians in need. These supplies were used to save many lives and provide the starving with the necessities they needed to survive another day. Drones also made an impact on South Africa when they were used to transport blood samples from clinics to hospitals to be tested for different diseases such as HIV.
           The article fails to stress the fact that drones are currently banned for commercial use, repercussions if drones malfunction, and cost for customers who want their product delivered by drone. According to an outside source the business insider, “The drone industry is frightening to many because its military applications are what tends to make news”. The FAA currently bans drones for all commercial use and therefore none of this will be possible for companies like Amazon if this law is not overturned. Until this law changes, drone delivery for commercial will not be possible, whether the technology is available and ready or not.

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