Based on the founder of the second biggest e-commerce company in China, employing robots to deliver parcel could lower costs and revolutionize the logistics industry. Richard Liu, the CEO and founder of JD.com, claims that drone technology will permit retailers to provide delivery services in the locations that are out of the way, without acquiring expensive logistics fees.
Functional, Efficient and Inexpensive
Liu says that there are currently more than 70,000 delivery men delivering products. If they used robotics to transport an item, the price will be extremely low.
In top notch cities like Shanghai and Beijing, Alibaba and JD.com are already recognized retailers. However, the growing middle class population of China is opening new stores for businesses in the countryside and smaller cities. This is where structures are not yet as industrialized as huge cities, which means there are economical methods of establishing a business.
An Expensive Past
Liu revealed that it was extremely difficult to conduct business in rural areas in the past, since logistics fees and other costs are quite high – and this is where drones come in. The retailers can use this to fly parcels from their warehouses in the cities to the consumer’s address in the countryside. Instead of using, vans, cars or trucks, this solution could lower the price. The logistics fee will reduce to nearly 70 percent, so they will be more lucrative.
According to a report by McKinsey & Co. in 2016, the rate for worldwide parcel delivery is around USD 78.38 billion. This total amount doesn’t include sorting, pickup and line-haul fees. The United States, China and Germany made up over 40 percent of the market, while the biggest growth driver is e-commerce.
At the moment, JD.com already tested drones that can soar to 100km per hour. These will transport parcels that weigh between 5kg to 30kg. The ones that they are testing can already lift approximately 1,000kg. It began in June 2016, when JD.com conducted trial flights that are currently operating in Jiangsu, Shaanxi, Beijing and Sichuan provinces of China.
Liu reveals that they expect this technology to transform the retail industry in the coming five years. For the next 10 years, he believes that it would move quicker than it did during the last hundred years as particular technologies develop.