At Your Door in Minutes, Delivered by Robot

DECEMBER 8, 2013, 11:00 AM

Disruptions: At Your Door in Minutes, Delivered by Robot

By NICK BILTON

Raise your hand if you get this whole Amazon drone thing.

By now the next bright idea from Jeff Bezos — that tiny drones will one day be whizzing overhead and dropping Amazon packages at America’s doorsteps — has gone through a few turns of the spin cycle. For many, it sounds like a sci-fi fantasy wrapped in public relations hype, or a total nightmare. Maybe both.To which I say: pizza. (Stay with me.)

Most of us take it for granted that we can have a pizza delivered to our door in about 30 minutes. But that kind of routine, hyper-convenience usually ends at the edge of the pizza box. Books, clothes, groceries: It usually takes at least 24 hours, and often two to five business days, for goods like those to be delivered.

Like it or not, e-commerce is changing the way the world shops. It is also changing expectations. Two-day delivery was great then, but this is now. Mr. Bezos is not the only one who says technology will continue to reshape the old-school delivery business just as it has reshaped so much else.

Why? In no small part because there is money to be made. Worldwide, e-commerce sales topped $1 trillion last year, according to the research firm eMarketer. Sales growth in the double digits will almost certainly continue through at least 2016. There is going to be a lot more stuff to deliver out there. What we buy on our smartphones in seconds we want on our doorstep in minutes.

Even the serious technophiles like Mr. Bezos say delivery drones and their ilk are still years away. Many ordinary people probably think the idea sounds dangerous, maybe even a little creepy, given that these drones will have cameras. So far, the Federal Aviation Administration has resisted the idea. Swarms of computer-guided octocopters? As if the F.A.A. doesn’t have enough to do.

But given the explosive growth of e-commerce, some experts say the shipping business is in for big changes. United Parcel Service, which traces its history to 1907, delivers more than four billion packages and documents a year. It operates a fleet of more than 95,000 vehicles and 500 aircraft. The ubiquitous Brown is a $55 billion-plus-a-year business. And, like Amazon, U.P.S. is reportedly looking into drones. So is Google. More and more e-commerce companies are making a point of delivering things quickly the old-fashioned way — with humans.

Some of the dreamers in the technology industry are dreaming even bigger. It won’t be just drones, they insist. Robots and autonomous vehicles — think Google’s driverless car — could also disrupt the delivery business.

“As cities become more automated, you’re going to start to see on-demand delivery systems that look like small delivery vehicles and can bring you whatever you want to wherever you are,” said Bryant Walker Smith, a fellow at the Center for Internet and Society at Stanford Law School and a member of the Center for Automotive Research at Stanford. “Rather than go to the store to buy some milk, a robot or drone will go to a warehouse and get it for you, then deliver it.”

Mr. Smith said these delivery vehicles would come in all shapes and sizes. Some might be able to scurry down alleyways and avoid traffic. Others could be refrigerated to store food.

Brad Templeton, a futurist and a member of the board of the Electronic Frontier Foundation, said the current systems for delivery — “with the exception of pizza” — were too cumbersome and expensive for today’s online shoppers. Autonomous vehicles, including drones, promise a faster, cheaper option.

“The cost of use will be pennies on the dollar compared to today’s delivery systems,” Mr. Templeton said. This, he added, could very quickly eat into the business of many delivery companies.

“None of the horse and carriage companies of the past ended up becoming automobile companies today,” said Mr. Templeton, who is also a consultant on the Google team designing a driverless car.

The roadblocks, real and potential, are significant. Safety is one worry. Another is current technology. Drones like the ones showcased by Amazon are electric and are estimated to be able to carry only small packages weighing less than five pounds. That means they would not work for most online purchases.

Hal Bennett, a drone researcher, has a possible answer for that. He wants to build drones powered by tiny jet engines rather than electric ones. He says they could carry 50- and 100-pound packages 45,000 feet up at 250 miles an hour. While his drones are still in a research phase, and very much under wraps, Mr. Bennett said the possibilities were endless.

“Imagine you’re climbing around in Yosemite and you decided you want a Burger King hamburger. You just order it on your GPS,” Mr. Bennett said.

Many people probably don’t want to imagine that. Drones over El Capitan? Delivering, of all things, fast food?

Then again, American pizzerias really began routine deliveries only in the 1950s, reflecting the rise of another bit of technology: the automobile. Then, in the ’60s, a man who started out with one pizzeria in Ypsilanti, Mich., came along and made quick delivery a priority. His name was Thomas Monaghan. The company: Domino’s.

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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