Tesco’s Experiment with Drone Can Be A Game Changer for Supermarkets

Summary

• Tesco to test aerial delivery through drones in October, it would initially try home deliveries of essentials
• Walmart begun trial of a pilot project on drone deliveries of essentials in North Carolina and has partnered with Israeli start-up Flytrex
• Drone deliveries would mean faster turnaround time and reduce dependence on the traditional supply chain network

General retailers in the UK were some of the sectors which remained in operation during the crisis of coronavirus pandemic and the subsequent lockdown imposed due to it. They have been an important and critical part in terms of contribution made to the nation’s economy. They had provided special support and services to the vulnerable sections of the society in a time of need.

The pandemic has compelled the retailers to re-strategies their business models for online delivery services. It has become pertinent as they are rapidly expanding their operations in the hope of a robust demand during the upcoming festive season.

FTSE 100 listed, British multi-retailer, Tesco Plc (LON: TSCO) is reportedly going to try drone deliveries of essentials. Given the prevalent conditions in the UK with reference to the pandemic, where people are keen to avoid going to public squares or supermarkets, drone deliveries appear to be a good proposition.

The leading supermarket chain would initially try home deliveries of essentials in small quantities by drone and expects the delivery time to be within 30 minutes. Tesco has joined forces with Manna, which is a drone delivery company; it currently has a license to operate in Ireland. Tesco will conduct the six-month trial starting in October.

Drone delivery is in a nascent stage, and as per Tesco, this segment has a huge potential in the UK in the upcoming years. It would be interesting to see how drone deliveries make the product on call a reality. Drone deliveries could help the retailers expand their reach to vulnerable sections of society.

Manna drone delivery has a proven record, upon which Tesco can leverage with its diverse product range. Notably, Manna could acquire drone licenses for areas other than Ireland if it has to expand its delivery services.

In 2015, Tesco’s biggest online competitor, Amazon UK, successfully delivered a bag of popcorn and a TV streaming stick, through its Prime Air drone delivery service in Cambridge, UK. The aerial delivery method could become a viable business sooner than the world has ever imagined.

The UK provides a conducive environment for companies to experiment with the aerial delivery method in the semi-urban or rural areas. Another US tech giant, Google, has been working on a drone project named ‘Project Wing’.

The US based retailer, Walmart has begun a trial of the pilot project on drone deliveries of essentials in North Carolina (United States). The company has partnered with Israeli start-up Flytrex to deliver select grocery and household essential items. The drone can fly up to 6.2 kilometres in a round trip. Walmart is the owner of Asda (UK supermarket chain).

The multi-retailers are expecting a surge in sales during the upcoming festive season; hence, they are looking for delivery alternatives apart from hiring a temporary workforce. The lockdowns induced by the novel coronavirus have indirectly brought the online shopping methods, which were just an alternative to conventional shopping methods, into mainstream shopping. This paradigm shift in the behaviour of shoppers has massively benefitted online e-commerce giants such as Amazon. With Tesco leading the way, other retailers are likely to follow suit as this might become the new norm of the industry.

In the prevalent circumstances, people fear going out for shopping, this innovation in the delivery network could boost sales for high street retail businesses, which have been struggling to remain afloat due to decrease in customer footfall. Moreover, the aerial delivery method could also help in mitigating the spread of the virus and keeping the reproductive rate of virus (R) low to some extent.

What does it mean for the logistics industry?

Drone deliveries are the future of e-commerce as a product on call will soon become a reality. Throughout the unprecedented crisis, logistics played a vital role in keeping our supplies up and running. The logistic business always works with a centralised approach. Drone deliveries would help in faster turnaround time (TAT) and would also reduce dependence on the supply chain network.

UK has officially entered the recession with its GDP (Gross Domestic Product) falling substantially by more than 20 per cent in the April to June quarter (Q2 2020), according to Office of National Statistics (ONS) report. Industry experts believe that only product innovation can help the UK climb out the recessionary cycle until the cure of Covid-19 is found. British retailers need to prioritise resilience and responsiveness over cost and efficiency as the economy is facing headwinds on multiple fronts with respect to Covid-19 and Brexit. In addition, the companies need to invest in their existing network of operations to achieve economies of scale and bolster their delivery network, which would allow them to manage the risks with reference to Brexit and any untoward incidents like Covid-19.