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The cost of delivery You argue that as if it's a constant -- and that it's not is the point. The exact innovation they are stumbling on is a way to lower that

The cost of delivery You argue that as if it's a constant -- and that it's not is the point. The exact innovation they are stumbling on is a way to lower that cost to near zero. Drone technology will eventually happen. The question is how far out it is. And make no mistake, when it does happen, it will truly be a revolution (without the hyperbole).

mc32 10y ago
Yes, but fuel isn't free, vehicles are not free (shrinkage isn't free). Margins on these goods is very poor (1% [1] makes or breaks an outfit). Now, let's say you're right, they want to get the technology right and want to drive prices down like FedEx did back in the '70s for overnight deliveries. Why not start with high value items --items where cost of delivery is a small fraction of the value of the good. Like FedEx did? Why go after groceries and perishables? It's an odd choice. This is akin to Musk choosing Titan over Mars to explore the feasibility of interplanetary colonization by people. [1]http://smallbusiness.chron.com/industry-standard-gross-margin-groceries-38121.html http://smallbusiness.chron.com/industry-standard-gross-margi...
- TheCoelacanth 10y ago
  To deliver something in an hour, you have to be storing it very close to where you are going to deliver it. With low value items, it is practical to do that. With high value items, the cost of doing that would be prohibitive.
  - mc32 10y ago
    So, for many of these items Google does not have Google warehouses full of the things. They can partner with high value item sellers like they do with these low value items. They are not incurring the costs of warehousing and parked money.
- AnimalMuppet 10y ago
  If the drone is a lower-cost delivery mechanism, then it has the greatest impact on low-margin items. Tablets can afford FedEx. Lettuce can't.
  - mc32 10y ago
    Doesn't that aid my point? Why did they choose to try to prove same day delivery with items which cannot sustain the cost of deliveries (yet) given current technology. Why not prove the concept with higher value items and then move down the chain --as FedEx did. This approach seems a bit backwards to me.
    - AnimalMuppet 10y ago
      No, I don't think it aids your point. Let's say I can deliver it (for whatever "it" is) $1 cheaper with a drone than with a truck. Let's say I'm delivering a $300 tablet. Nobody cares about the $1. (I mean, yes, some business - either the seller or the delivery business - cares about the $1. But it's not enough to move the needle on customer behavior. If it would, a reasonably smart seller would drop their price $1.) But if I'm delivering a head of lettuce, that $1 difference is going to make significantly more customers have lettuce delivered. And the seller can't drop their price $1 to achieve the same effect, because they have 1% margin. More: If the seller lowers the price 98 cents and keeps 2 cents, the seller just doubled their margin on that head of lettuce. I think your point is also valid - working from the top of the value chain down is a fine strategy, and FedEx is a great example of it. But working from the bottom up ("disrupting from below") is also a very useful strategy, and Intel is a good example of it. They started making chips to power calculators. They didn't start by trying to replace IBM mainframes.
      - mc32 10y ago
        There is the interesting success of dabbawallahs who while operating on small margins while delivering perishable and time sensitive goods, do make a profit. So, in some circumstances success can be achieved, if it solves a problem that does not have an easy solution (in this case "home cooked" meals delivered to the workplace, but this has a cultural aspect to it and not sure how well it would translate to other items).
edblarney 10y ago
Flying drones for delivery are a long, long ways off. + Power/Range - drones can't fly very far + Load - they can't carry a lot + Landing - in urban areas - there are few places to land + Securing content - You can't just leave a box on the front lawn in many cases + Safety - flying a lot of drones result in failures, we can't have drones falling out of the sky. They also pose other hazards. So many issues with drones. I suggest that 'self driving delivery vehicles' will happen long before drones, and when they do, the added cost of 'drone' simply won't be worth it for most purchases.
- david927 10y ago
  + Power/Range - you can use relays, + Load - they only need to take small individual items; many items means many drones, + Landing - an edge case, + Securing content - Leaving a box on the front porch is exactly what happens now in most cases; but in this case you would know exactly when it will be delivered and can schedule it for when you're home and be notified the instant it arrives on your doorstep which is much better, + Safety - drones falling from the sky are not the hazard that cars already are. I think you're right that 'self-driving delivery vehicles' might happen first, but I honestly think that drones will follow, and the cost of delivery from solar-power-recharged inexpensive drones is going to go to near zero. The question was, why is there investment in this when it delivery has failed in the past, and the answer, whether it's drones or self-driving vehicles is that once inexpensive delivery options are possible, in general, it will change everything.
  - edblarney 10y ago
    " cost of delivery from solar-power-recharged inexpensive drones is going to go to near zero" Solar electricity is much more expensive than electricity from other sources, more importantly, 'fuel' a very minor issue in the 'total cost of delivery'. The 'cost' will be in so many other things, first off - having inventory within a 'drone flight' away from people. I actually don't believe that drones will ever fly stuff to our door. It will always be more expensive to delivery stuff 'by flying drone' - and 'very quickly'. See: prices for airmail vs. snail mail. So what do consumers really need that they can't drive to the store for? Toothpaste? Books? Toilet paper? No. That won't be cost effective. If someone 'really needs something now' - the 'cost effective' way to do it is to walk or drive down the street to the store. Delf-driving trucks, with 'robot arms' to nicely 'drop stuff off' for the rest.
saosebastiao 10y ago
I've worked in Supply Chain and Logistics at one of the biggest and most innovative players in the arena, and I can tell you that 99% of the "innovations" that get talked about are complete unadulterated bullshit. As in orders of magnitude more expensive than traditional delivery models. There's plenty of innovation, but drones are not one of them. They will fail hard. The physics alone is a huge obstacle, but the planning, logistics, and optimization possibilities that they create or take away guarantee it will only ever be used in insignificantly tiny niches, if at all.

mc32 10y ago

Yes, but fuel isn't free, vehicles are not free (shrinkage isn't free). Margins on these goods is very poor (1% [1] makes or breaks an outfit). Now, let's say you're right, they want to get the technology right and want to drive prices down like FedEx did back in the '70s for overnight deliveries. Why not start with high value items --items where cost of delivery is a small fraction of the value of the good. Like FedEx did? Why go after groceries and perishables? It's an odd choice. This is akin to Musk choosing Titan over Mars to explore the feasibility of interplanetary colonization by people. [1]http://smallbusiness.chron.com/industry-standard-gross-margin-groceries-38121.html http://smallbusiness.chron.com/industry-standard-gross-margi...

TheCoelacanth 10y ago
To deliver something in an hour, you have to be storing it very close to where you are going to deliver it. With low value items, it is practical to do that. With high value items, the cost of doing that would be prohibitive.
- mc32 10y ago
  So, for many of these items Google does not have Google warehouses full of the things. They can partner with high value item sellers like they do with these low value items. They are not incurring the costs of warehousing and parked money.
AnimalMuppet 10y ago
If the drone is a lower-cost delivery mechanism, then it has the greatest impact on low-margin items. Tablets can afford FedEx. Lettuce can't.
- mc32 10y ago
  Doesn't that aid my point? Why did they choose to try to prove same day delivery with items which cannot sustain the cost of deliveries (yet) given current technology. Why not prove the concept with higher value items and then move down the chain --as FedEx did. This approach seems a bit backwards to me.
  - AnimalMuppet 10y ago
    No, I don't think it aids your point. Let's say I can deliver it (for whatever "it" is) $1 cheaper with a drone than with a truck. Let's say I'm delivering a $300 tablet. Nobody cares about the $1. (I mean, yes, some business - either the seller or the delivery business - cares about the $1. But it's not enough to move the needle on customer behavior. If it would, a reasonably smart seller would drop their price $1.) But if I'm delivering a head of lettuce, that $1 difference is going to make significantly more customers have lettuce delivered. And the seller can't drop their price $1 to achieve the same effect, because they have 1% margin. More: If the seller lowers the price 98 cents and keeps 2 cents, the seller just doubled their margin on that head of lettuce. I think your point is also valid - working from the top of the value chain down is a fine strategy, and FedEx is a great example of it. But working from the bottom up ("disrupting from below") is also a very useful strategy, and Intel is a good example of it. They started making chips to power calculators. They didn't start by trying to replace IBM mainframes.
    - mc32 10y ago
      There is the interesting success of dabbawallahs who while operating on small margins while delivering perishable and time sensitive goods, do make a profit. So, in some circumstances success can be achieved, if it solves a problem that does not have an easy solution (in this case "home cooked" meals delivered to the workplace, but this has a cultural aspect to it and not sure how well it would translate to other items).

edblarney 10y ago

Flying drones for delivery are a long, long ways off. + Power/Range - drones can't fly very far + Load - they can't carry a lot + Landing - in urban areas - there are few places to land + Securing content - You can't just leave a box on the front lawn in many cases + Safety - flying a lot of drones result in failures, we can't have drones falling out of the sky. They also pose other hazards. So many issues with drones. I suggest that 'self driving delivery vehicles' will happen long before drones, and when they do, the added cost of 'drone' simply won't be worth it for most purchases.

david927 10y ago
+ Power/Range - you can use relays, + Load - they only need to take small individual items; many items means many drones, + Landing - an edge case, + Securing content - Leaving a box on the front porch is exactly what happens now in most cases; but in this case you would know exactly when it will be delivered and can schedule it for when you're home and be notified the instant it arrives on your doorstep which is much better, + Safety - drones falling from the sky are not the hazard that cars already are. I think you're right that 'self-driving delivery vehicles' might happen first, but I honestly think that drones will follow, and the cost of delivery from solar-power-recharged inexpensive drones is going to go to near zero. The question was, why is there investment in this when it delivery has failed in the past, and the answer, whether it's drones or self-driving vehicles is that once inexpensive delivery options are possible, in general, it will change everything.
- edblarney 10y ago
  " cost of delivery from solar-power-recharged inexpensive drones is going to go to near zero" Solar electricity is much more expensive than electricity from other sources, more importantly, 'fuel' a very minor issue in the 'total cost of delivery'. The 'cost' will be in so many other things, first off - having inventory within a 'drone flight' away from people. I actually don't believe that drones will ever fly stuff to our door. It will always be more expensive to delivery stuff 'by flying drone' - and 'very quickly'. See: prices for airmail vs. snail mail. So what do consumers really need that they can't drive to the store for? Toothpaste? Books? Toilet paper? No. That won't be cost effective. If someone 'really needs something now' - the 'cost effective' way to do it is to walk or drive down the street to the store. Delf-driving trucks, with 'robot arms' to nicely 'drop stuff off' for the rest.

saosebastiao 10y ago

I've worked in Supply Chain and Logistics at one of the biggest and most innovative players in the arena, and I can tell you that 99% of the "innovations" that get talked about are complete unadulterated bullshit. As in orders of magnitude more expensive than traditional delivery models. There's plenty of innovation, but drones are not one of them. They will fail hard. The physics alone is a huge obstacle, but the planning, logistics, and optimization possibilities that they create or take away guarantee it will only ever be used in insignificantly tiny niches, if at all.