Welcome to Near Future. In this weekly feature, The Current spotlights innovations powering the next wave of commerce.
On Dec. 2, 2013, Jeff Bezos appeared on 60 Minutes to plant a flag for the future of ecommerce: drone delivery.
As the Amazon founder unveiled the company's delivery drones for CBS cameras, he talked about how they would be key to the company's goal of providing 30-minute delivery. Prime Air hype went into the stratosphere. Yet it’s worth remembering that, during the interview, Bezos did attempt to bring things back to Earth.
“This is early,” he said during the interview. “This is still...years away.”
Later in the interview, Bezos talked about how introducing drone delivery five years might be realistic, even while allowing that he is an optimist. Nearly a decade later, drone delivery isn’t yet a normal part of the ecommerce equation. As is often the case with emerging technologies, there have been plenty of times when results of a test required charting a different course. But companies have continued to invest. Technologists, flight experts, ecommerce professionals and regulators have kept at development, and made progress. In fact, the first half of 2022 is bringing lots of advances. Here’s a look at some of the latest developments:
Walmart goes big
A Walmart drone in flight. (Courtesy photo)
Walmart’s drone delivery is set to take flight across the country.
This week, the retailer announced plans to expand its DroneUp delivery network to 34 sites in the United States by the end of the year. That means it will have the potential to reach four million households in states including Arizona, Arkansas, Florida, Texas, Utah and Virginia.
Walmart’s service will make under-30-minute delivery available between the hours of 8 a.m. and 8 p.m. The fee is $3.99 for items totaling up to 10 pounds.
In testing, Walmart said it expected customers to use the service for emergency items. But the more popular use case has been the convenience it provides. The most-ordered item so far, the company said, is Hamburger Helper.
When it comes to scaling drone delivery, Walmart has a unique advantage. Its roughly 4,700 stores put it within 10 miles of 90% of the population. With thousands of items, these stores already have many things under one roof. With drones, it will add an air traffic control of sorts. To complete these flights, each store will have a team of drone pilots.
Once a shopper clicks “buy,” items are fulfilled in the store, packaged and loaded onto a drone. When they arrive at a dropoff point, they are lowered by cable into a customer’s yard.
Walmart partnered with Virginia Beach-based DroneUp on the service. The retailer invested in the startup early in mid-2021. By late last year, the companies stood up three hubs to test the service in the company’s home state of Arkansas.
With the expansion of Walmart’s network, DroneUp will also make services available to municipalities and businesses for functions like insurance, emergency response and real estate.
This will help to further establish drone-based businesses in these areas.
“Not only will the added revenue help offset the cost of delivery, but it also serves the entire drone industry by gathering more flight data as we work together to expand drone operations in a safe and regulated way,” Walmart wrote.
Walmart’s ambitious expansion means the retailer will have the largest reach of any commerce-driven drone delivery program we've seen to date. That also means it will be the first to learn how it works in wide use, and whether there is broad public uptake beyond the novelty of ordering via drone.
Wing spreads in Texas
Wing in the air. (Courtesy photo)
Walmart’s announcement came just over a month after Alphabet drone subsidiary Wing announced what was then the largest test of drone delivery in a metro area. In mid-April, the company began delivering items from Walgreens in four suburbs of Dallas, Texas. Operating for customers within a six-mile radius of a store, the company set an ambitious goal to deliver items in 10 minutes or less.
Orders are fulfilled by Walgreens employees, who receive notification on a tablet that an order is in, then locate an item in the store and package it, the companies said. The employees then clip items onto a drone in the parking lot of a store, where they are waiting on charging pads. Wing employees then oversee deliveries, which are made to doorsteps, backyards or another preferred location.
This is a big effort, and there will be plenty of learnings. Chief among them: How drones can optimize for navigating a more complex near-urban area as they deliver packages.
Ice cream express
(Photo courtesy of Flytrex)
When it comes to encouraging adoption, providing delivery of an item that people love can help sweeten the deal. That’s the approach Unilever is taking this summer as it provides ice cream delivery via drone in North Carolina and Texas.
The consumer goods company – and self-described largest ice cream maker in the world – is partnering with food-focused drone delivery company Flytrex, which operates in North Carolina towns of Holly Springs, Fayetteville and Raeford, as well as Granbury, Texas.
The drones will deliver via The Ice Cream Shop, an online store from Unilever that carries brands including Ben & Jerry’s, Breyers, Good Humor, Klondike, Magnum ice cream, Popsicle and Talenti.
Once orders are placed using the Flytrex app, deliveries will be made to the front and backyards of residents in under three minutes. Under an FAA waiver, the service is allowed to operate within one nautical mile of a delivery site, putting homes within its reach in the thousands.
This airborne drone delivery is running alongside a separate Unilever pilot offering on-demand ice cream delivery via ground-based autonomous vehicles in Los Angeles.
Pilots continue
For now, drone delivery remains in test mode. The Federal Aviation Administration has yet to approve a commercial program, as each of the programs described above are technically operating with special permission.
To be sure, however, the progress of drones is intriguing, and companies have good reason to continue moving forward with testing. Drones stand to take cars off the road and reduce emissions. Plus, if programs grow, they could help reach people in remote areas. If programs were to scale massively, there is also the promise of reducing labor costs.
Drone delivery could solve a key challenge of ecommerce operations: Faster delivery is increasingly expected by consumers, but it gets more complex as scale increases. For a glimpse of the difficulty of launching a large-scale drone program, look no further than Amazon. Its ambitious plans for Prime Air have hit roadblocks such as drone crashes and safety concerns, according to an April report in Bloomberg. Costs are also an issue. Business Insider reported that Amazon's drone delivery is $63 a package, while on-the-ground packages cost $5.50 each. Still, the company intends to complete 2,500 tests this year. Down the road, there may be another big unveiling still to come.Trending in Operations
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Drop it in The Cart
Walmart will offer a Bob Ross lithograph. (Courtesy photo)
After a period of study and testing, large platforms and retailers are beginning to move ahead with putting new tools to facilitate these transactions into wide release.
The area of digital collectibles is emerging as one of particular interest. Limited edition, collectors’ items have long commanded their own markets. Think of trading cards, action figures, limited-run pressings or the art market as a whole. Now, these are taking digital form. The emergence of tools such as nonfungible tokens (NFTs), which store harness blockchain technology to allow individual versions of digital creations to be available for buying and trading via cryptocurrency, are enabling the beginnings of a new kind of market.
Of the large platforms where ecommerce takes place, eBay has been among the earliest movers in this area. Given that the marketplace is already a place where physical collectibles are exchanged, the extension into digital collectibles makes sense in theory.
eBay has taken steps to put it into practice. The marketplace began allowing buying and selling of NFTs on its platform in 2021. The stated ideas behind the launch made it clear that it saw digital collectibles fitting into the platform.
“eBay has always been the world’s destination for buying and selling the most unique and hard-to-find items - and we’ll continue to be the destination for collectors of all kinds, physical or digital,” said Jordan Sweetnam, SVP and general manager of the Americas for eBay, wrote in an announcement at the time of the NFT expansion in 2021. “This opportunity unlocks new assets for collecting, new ways for people to fuel their passion, and expands eBay’s appeal to a new generation of collectors.”
The marketplace has picked up activity in this area this year. In May 2022, it launched an initial collection of NFTs on the web3 platform OneOf, which were new interpretations of iconic athletes featured on Sports Illustrated covers. In June, the marketplace took another step toward facilitating transactions when it acquired NFT marketplace KnownOrigin, which allows artists and creators to showcase and exchange digital works for collectors.
The eBay vault. (Courtesy photo)
For eBay, this is part of a wider strategy to provide space for the digital exchange of collectibles as a whole. It is also making big investments in physical collectibles, including a new vault for trading cards that provides storage and a digital marketplace, and the $295 million acquisition of TCGPlayer, a marketplace for collectible trading cards like Magic the Gathering and Pokemon. Those goods will require specific tools to solve their own set of challenges, including authentication to ensure items are what they say they are, and ensure they are truly limited in quantity. Yet it is emerging alongside the digital collectibles, and it’s clear that eBay sees the two sides fitting under its tent.
“One reason that we're excited to launch the Vault is because it can enable real-time transactions for physical or digital goods,” eBay CEO Jamie Ianone said on the company’s recent second quarter earnings call. “This intersection is nascent, the one that collectible enthusiasts are increasingly exploring. This is part of the rationale behind our second quarter acquisition of KnownOrigin.”
A potential connecting point was made more clear on Monday, when Walmart entered the fray. The retailer announced a new partnership with the National Entertainment Collectibles Association that will result in a new platform, called AutoT, that enables digital collectibles.
AutoT will have a series of rare variants of collectibles and figures that are signed by stars and creators.
Here's how it works: To access the platform, customers will be able to purchase a box from Walmart that is tied to a specific pop culture property. Upon purchase, they enter the digital code found on their Walmart receipt into a personal account at AutoTVault.com. This reveals which collectible item they’ve received. Collectors will be able to store a digital collectible for up to two years free of charge in the NECA’s Vault, or have a physical item shipped to them.
Launching on Oct. 6 at Walmart’s website, the platform will debut with collectible figures from Teenage Mutant Ninja Turtles, featuring Shredder, Renet and Foot Soldier, with potential for fans to receive versions of the digital figures signed by co-creator Kevin Eastman. Exclusive lithographs from the TV icon and artist Bob Ross will also be available at launch. New products are set to drop at regular intervals, Walmart said.
A Shredder action figure. (Courtesy photo)
For Walmart, this is an extension into a new form of commerce as it looks toward the future of retail, which has long been built around physical goods. Coupled with last week’s announcement that it is building a large experience in Roblox, it’s clear the world’s largest retailer wants to have a presence wherever goods are being bought and sold. The throughline here is that digital collectibles can usher in an evolution of shopping.
“At Walmart, we are always finding new ways to bring innovation and one-of-a-kind offerings to our customers,” said Laura Rush, SVP of electronics, toys and seasonal at Walmart US, in a statement. “NECA’s unique collectibles and inventive AutoT platform offer a new type of shopping experience to shoppers, ensuring that Walmart is bringing the best in tech and entertainment to customers nationwide.”
This may be a test not only of the tools and shopping functions, but also where value is shown. Will a person find value in a digital work that can be linked to its creator in the same they would a physical work that has touched the artist's hands? In other words, can Bob Ross' resurgence courtesy of memes and YouTube translate to people wanting to own a piece of his work?
NFTs on Instagram. (Photo via Meta)
Given that art is involved, it's also worth considering what will happen when the gallery wall is removed. The ability to display and share collectibles in common spaces may also be valuable. One avenue arrived last week. Meta opened up the capability for users to share digital collectibles that they have purchased or bought on Facebook and Instagram to everyone. These collectibles can also be shared between the two platforms. Making good on an announcement it made in May, Meta said users can now connect a digital wallet and display NFTs from those wallets on the platform, The NFTs will have a shimmer effect, and public information like a description of the NFT can be displayed. The work can be attributed to both the creator and collector.
As Ianone referenced, these are nascent launches. They may not be the versions that last, but they are important steps toward pushing this form of collectibles into wide release. Provide the tools, figure out what people find valuable and new markets can take root.
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