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The world’s largest retailer, Walmart, just launched a pilot project on delivering select groceries and essential items using automated drones, and the implications are enormous, not just because Amazon won’t like it, but because the drone industry is about to take off like no one’s business.
Walmart has teamed up with Flytrex, an end-to-end drone delivery company, launched in Fayetteville, North Carolina. And now it plans to unleash some serious package delivery from the skies--eventually.
“We know that it will be some time before we see millions of packages delivered via drone. That still feels like a bit of science fiction, but we’re at a point where we’re learning more and more about the technology that is available and how we can use it to make our customers’ lives easier,” Senior Vice President for Consumer Product Tom Ward said in a blog post.
For now, though, this is still in the testing phase, and it’s not likely to be available to anyone outside of Lafayetteville anytime soon.
Walmart, of course, is not a pioneer in exploring the possibility of drone delivery. Several companies have recently received approval from the Federal Aviation Administration to operate their own delivery drones, including Amazon, UPS and Wing, an Alphabet Inc subsidiary.
Overall, the idea of drone delivery is far from novel, but efforts to make this mainstream have been consistently blocked by the Federal Aviation Authority (FAA) over safety and privacy issues, which is fair enough.
However, last January the Trump Administration set forth a proposal to allow drones to fly over heavily populated areas and at night, two factors that have halted drone delivery efforts in the past.
Wing launched a pilot program last September with Walgreens and FedEx to deliver to eligible customers in one town in Virginia. The key to that approval was that the town had no high-rises or other obstructions.
Wing’s drones are equipped with extra motors meant to prevent falls, and all flights are overseen remotely by certified pilots. Additionally, Wing drones don't land at drop-off sites; instead, they hover some 20 feet in the air and lower their cargo to the ground on a tether, cutting down the possibility of it falling on someone’s head.
Last April, Wing was the first company to receive FAA approval for door-to-door drone delivery. However, like any other industry, competition here is strong as well.
Earlier this month, UPS also obtained permission from the FAA to operate delivery drones at university, hospital and corporate campuses. UPS also teamed up with drugstore CVS to develop a drone delivery service for prescription drugs.
Some six years ago, Amazon CEO Jeff Bezos predicted that the online retail giant's "octocopter" drones would start buzzing out of fulfillment centers in the coming years. In late 2016, the company announced its first fully autonomous Prime Air delivery.
In late-August, the FAA approved Amazon's Prime Air service, which will use drones to deliver packages and will be equipped with “sense and avoid” tech for safety.
Uber also aims to roll out a fleet of food-delivery drones for next year. The meal delivery service launched a test program in San Diego over the summer in partnership with McDonald's. However, a proposal by Uber has been met with local opposition over noise concerns.
As a result of the ongoing trend, commercial drones’ sales are thriving.
According to the Allied Market Research report, the global commercial drones market is estimated to reach $10.28 billion by 2022, registering a compound annual growth rate (CAGR) of 25.2% from 2016 to 2022. By 2027, it’s projected to top $18 billion.
The pandemic could speed things up, especially with social distancing at the forefront of a diseased future. While threats to privacy and airspace security, as well as safety issues remain, indications are that COVID-19 could help clear some of those regulatory hurdles.
China’s JD.com--a ecommerce powerhouse--is working alongside the government to conduct surveys and create appropriate flight corridors to enable broader deployment of drone deliveries, and in the UK, government funding is helping things along, as well, according to RIS.
Drones are coming. We’ve known that for a while. But now they might hit the skies faster than previously anticipated, opening up major new opportunities for forward-thinking investors.
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