Industry Insights
The global retail consumer drone market was valued at USD 37.1 million in 2017. Growing demand for quick delivery is projected to increase the scope of drones in the retail sector over the next eight years. The use of drones increases operational efficiency and reduces the total operating cost in the long term.
The demand has increased from distributors and retailers in the past few years as they are increasingly being used as key tools to increase efficiency in supply chain management with the view to reduce delivery cost. For instance, in June 2016, Walmart announced to use drones for inventory management in all its warehouses.
The number of online shoppers has been increasing, who are putting great importance on flexibility, convenience, the speed of delivery and are willing to pay a premium for quick delivery. To this end, distributors and retailers are deploying speedy delivery services using drones to reduce fuel expenses and avoid traffic congestion. For instance, in 2015, e-commerce firm, Amazon suggested the allocation of a specific airspace zone for operating drones to deliver products to customers.
Government regulations play a key role in the roll-out of drones in the retail sector. Agencies such as the European Aviation Safety Agency (EASA) has restricted the utilization of drones citing the limitations in managing air traffic and citizen safety. In the U.S., however, as per a set of regulations, drones can be used during the daytime if they weigh up to 55 pounds, stay below a height of 400 feet in the air, and fly at a speed of less than 100 mph.
Segmentation by Capacity
• Less than 5 pounds
• More than 5 pounds
Drones having a carrying capacity of less than or equal to 5 pounds dominated the market with more than 70.0% share in 2017. These retail UAVs have gained traction as they are lightweight, provide better stability, and are apt for quick delivery.
Retail UAVs with a carrying capacity of more than 5 pounds are the fastest growing segment with a CAGR of more than 18.0% from 2017 to 2025. These UAVs are used for delivering products at a distance of more than 10 miles.
Segmentation by Region
• North America
• Europe
• Asia Pacific
• Rest of the World
North America accounted for more than 35.0% market share in 2017. Regulatory approval coupled with cost control and efficiency has played a key role in the adoption of retail UAVs in the region. In the U.S. companies such as Amazon and Walmart are at the forefront of deploying retail UAVs to become cost competitive by reducing employee count and increase efficiency in managing their supply chain.
Europe is expected to generate a revenue of more than USD 40 million by the end of 2025. The positive outlook towards online grocery shopping in countries such as the U.K. and Germany are expected to promote the scope of retail consumer drones.
Asia Pacific is expected to witness the fastest growth at a CAGR of more than 19.0% from 2017 to 2025. Rising penetration of direct-to-consumer service providers in countries such as Japan, Singapore, India, and China is expected to increase the demand in the near future.
For instance, in China, JD.com, one of the largest retailers in the country, initiated its drone delivery program in Jiangsu, rural Beijing, Sichuan, and Guangxi provinces in 2016. The rising concerns over traffic congestion and high concentration of vehicles in metros as well as sub-metropolitan cities are also expected to benefit the retail UAVs market in the coming years.
Competitive Landscape
The retail consumer drone market is in the initial growth phase and is expected to witness increased adoption of retail UAVs with a supportive regulatory framework in the coming years. Companies such as Amazon, Walmart, and Alibaba, are increasing spending on drone delivery services. Some of the key companies in the market include Parrot Drones SAS, SZ DJI Technology Co., Ltd., Yuneec and Power Vision. In the coming years, more retailers are expected to opt for drone delivery services, which is expected to spur demand. Regulatory approvals will play a crucial role in the adoption of retail UAVs in the near future.
