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Drones and Trailers to solve delivery bottlenecks
Package delivery companies have gotten a boon from the rise in e-commerce, but that could be undone by the proliferation of drone delivery.
Shipping expenses are also taking a proportionally larger portion of Amazon’s revenue, growing to $8.7 billion last year, or 9.8% of revenue. Delivering items by drone would not only delight customers, but could help the company save on expensive shipping costs.
More recently, Amazon announced it will be using branded trailers attached to trucks to ship packages in between fulfillment centers, and Amazon will continue to rely on its shipping partners to drive them from point to point.
The trailer system and the drones are just two of the many experiments Amazon is carrying out to make delivery faster and more convenient. With every step it takes in that direction, Amazon strengthens its grip on the retail industry and burnishes its economic moat. Unlocking drone delivery could accelerate Amazon’s growth like nothing before it.
Walmart: Adding credence to the future of delivery drones was Walmart’s recent announcement that it too would like the automated flying machines to ship products. In October, the world’s largest retailer filed with the FAA for permission to test flying drones outdoors after months of testing it indoors Wal-Mart similarly hopes to one day use the machines to deliver orders as a spokesman pointed out that 70% of the U.S. population lives within five miles of a Wal-Mart store, right within the range needed for effective drone delivery.
Alphabet: Alphabet, Inc. is also working on drone delivery as its Google Express division has partnered with a number of retailers to provide speedy delivery in cities.