China Leading the Way in Drone Delivery: Keep an Eye on This

Drone technology was once exclusively used by the military but has entered the consumer market and grown quickly in popularity. Utilizing drone technology for film and photography purposes has added a new tool to many industries, including real estate, and has also created something new for hobbyists. With film and photography applications helping to create the rise in popularity, it was only a matter of time before other industries started to take note.

Amazon has teased drone delivery for the future, but China may be leading the way with making it more of a reality. China is using it primarily in the rural parts of the country where it is not as economical to deliver goods via traditional methods —drones provide a much easier way to access these areas. Not only does it provide an easier and possibly more direct route to make deliveries, it can be more economical for a company as well. It results in a premium service by getting packages to the customer quicker as well as saves on gas and operator time.

In fact, in a real test of drone delivery, JD.com utilized drone delivery on single’s day in 2016 to log over 10,000 minutes of flying time. This resulted in a reduction of delivery costs by 50%, that’s just under $.08 a package.

What Does This Mean for CRE?

With drone delivery creating better access to previously difficult to reach areas, this could create less of a need to expand distribution networks to these areas and centralize with larger distribution centers. When it comes to distribution centers, they will also need an area to have their drones take-off, whether it is from the distribution center or another location. These locations will most likely be put outside of city areas as the regulations to fly in these areas are much more difficult.

Drone delivery could also be utilized for store delivery, which will make it quicker and easier for consumers to receive products even more on demand. An example of this is the deliveries that 7-11 in Reno, Nevada has been doing to local customers within a one-mile radius. This also starts to prove the case that utilizing a drone in a more populated and urban area can be possible.

Regulation Setbacks

While these example cases are showing that drone delivery is not only feasible, but could help to improve a business’s cost effectiveness, there are still many areas to navigate like government regulation. This is especially true in the United States, which has put strict regulations on how delivery drones can be utilized. The restrictions include the height at which they can fly, the time and the weight of the drone. On the other hand, China has less restrictions, which is why drone delivery is growing at a more rapid rate. The Chinese government has even encouraged companies to utilize drone delivery.

When it comes to drone delivery in the United States, it will be interesting to see where this trend goes. Will your next grocery list be loaded into an app on your smartphone only to be delivered same-day by a drone? Only time will tell.