Example: Pianos. They can't be delivered by drones.
With the upcoming holidays, pianos will sell to those longing for one in their home after mastering their lessons. So, in deciding what piano they want they choose, the William E. Steinway Limited Edition. But, they are manufactured partly in Germany and partly in New York. So, like how long is it going to take to have that piano set up in the living room in time for Christmas Morning?
How does overnight sound? But, it has to be delivered to a Colorado address. How can it be here overnight?
Simple, warehouse space. And one might be surprised how local economies benefit from such enterprises. Steinway decided it is best to have an inventory of pianos where their stores are located. So, they took the initiative to store their inventory all over the country. And yes, it can be delivered overnight from a warehouse storage area far from their factories.
Overnight delivery isn't about speed of transportation, it is about smart warehousing and knowing the market. So, as a gift giving holiday approaches companies SHOULD BE checking where their products sell heavily and open up more warehouse space to stock what sells in a given market.
Amazon, with their dreamscape of drone delivery will be facing an uphill battle to provide cost effective service. A drone is not liked in general in the USA. And to have one at the door with a package is even less desirable. Not only that, but, it is not cost effective.
When a USPS truck delivers packages in a local economy there are many packages in the truck and the expense is spread over a large consumer base. The drone delivers one or maybe two packages at a time. Not only that but unless every drone has a pilot the infrastructure for pilotless drones is extremely expensive. Cell towers won't allow for successful drone delivery. There would have to be a computer chip at each address so the pilotless drone can find it's destination. The entire enterprise is interesting, but, quite frankly it won't get off the ground.
This is from a 2003 report (click here).
...So how big is this mundane business of delivering stuff? How important is it?
- The U.S. Postal Service says it "anchors a $900 billion domestic mailing industry that employs roughly one in fifteen American workers." Given a domestic workforce of 143.1 million people in October 2002, more than 9.5 million U.S. jobs are related to the postal system.
- UPS had profits of $2.4 billion in 2001. In comparison, media and online giant AOL Time Warner lost $4.9 billion, while General Motors had a net income of $601 million and IBM earned $7.7 billion.
- The U.S. Postal Service has more employees than any domestic business except Wal-Mart.
- The $584 million profit generated in fiscal 2001 by FedEx was more than six times larger than the $90.4 million in net income earned by EBay in 2001.
- The parcel delivery market has been the fastest-growing transportation segment in the United States over the past two decades. This market has more than doubled its share of the nation's transportation budget since 1980 and now carries at least 10% of each day's gross domestic product. (Note 1)
In the "parcel" sector, a category which includes packages weighing from 2 to 70 pounds, UPS collected 63.9% of all revenue. UPS generated more than 80% of the revenue from parcels handled as "ground" shipments.
In the "overnight" category, FedEx took in 58.2% of all overnight letter receipts and 59.3% of all revenue from packages under 2 pounds.
The Postal Service generated 70.4% of the revenue from parcels under 2 pounds that were handled as a deferred air (2-3 day service)....
