måndag 17 oktober 2016

Fly me to the moon - Gästbloggare Sean Ennis

Högskolan i Borås och SIIR har haft förmånen att ha besök av Sean Ennis för ett tag sedan. Dr Ennis är föreståndare för Masterprogrammet i Marknadsföring vid University of Strathclyde och har bl.a. skrivit boken "Retail Marketing". Här får ni bloggläsare ta del av Seans tankar efter sitt besök hos oss där han bl.a. ställer sig frågan: finns det verkligen ett behov av high-tech lösningar vad gäller e-handelsleveranser som verkar vara mer high-tech än att de verkligen levererar kundvärde? 

The title of this blog is taken from a song delivered by that hoary old crooner Frank Sinatra. I was reminded of it recently when reading about the continuing developments within Amazon with regard to their work on mobile air deliveries i.e. drones. Its more technical term is the use of Unmanned Aerial vehicles (UAV’s). Within the United Kingdom Amazon received clearance from the UK government and the Civil Aviation Authority to test out the use of drones as a mechanism for delivering items to its customer base. The overall aim of Amazon is to be in a position to deliver parcels within thirty minutes of the placement and payment of an order.

The permission is contingent on a number of restrictions; most of which are obvious and focus on issues of health and safety. These include the avoidance of obstacles and flight patterns and how they are operated. The basic idea was proposed by Amazon as far back as 2013 and it has been working on the concept ever since. What is the specific value proposition?

Photo: Nyteknik.se 

Amazon is striving to develop drones that are capable of delivering a parcel of up to 25kg in weight over a distance of around ten miles. This could be to the home, office or a specific designated pick-up location (depending on the preference of the shopper and safety concerns)). In essence it takes the concept of mobile delivery to a new level. Up to now, retailers have experimented with conventional transport modes such as lorries, vans, motor bikes, bicycles and walking to the location. Taking to the air is seen as a potential game-changer in terms of speeding up the process of delivery. It also potentially overcomes the challenges of driving to the destination via potentially horrendous traffic jams and congestion experienced in many of the major cities and centres of high urban population. How practical and achievable is this development?

In terms of health and safety for instance it doesn’t cause any potential difficulties in terms of collisions with planes: the UAV’s do not fly above 400 ft. However there are some practical issues to be overcome. Current legislation within the UK means that such drones cannot be flown within 50 metres of a vehicle, person or building. It has to remain in line of sight and within 500 metres of the pilot. How do you deliver to customers who live on the tenth floor of an apartment block?

In terms of customer service it could be argued that it is the essence of low –touch; indeed non-touch. The customer does not meet or is not greeted by a representative of the retailer, nor is there a friendly smile or tangible reassurance if there are errors with the delivery.
On a more practical level is there any evident demand from shoppers for such a service?
As I have noted in the book, the problem with mobile marketing is that there is an ever-present danger that companies can abuse their strong position (from having so much data on the individual’s shopping patterns) that they invade people’s privacy. Imagine a scenario where you have stepped out of your shower and are caught by a UAV passing by as you look out the window.

Do most people expect or want deliveries within thirty minutes? Will the sky be swamped by hundreds of drones flying this way and that way to deliver and drop parcels?
The short answer is that I don’t know. As a shopper such activities are likely to irritate me and as long as I have a firm indication of the delivery period then it is unlikely that I would want my weekly Tesco shop to arrive within thirty minutes.
From a more cynical perspective is this typical of companies who become obsessed technology and allow their research “boffins” to play around with very innovative but ultimately irrelevant designs? A classic case of being “R&D-led” as opposed to being “customer-led”?

Other practical considerations come into play. The nature of the items to be carried via such UAV’s is very restrictive. For instance it cannot carry “white good” items such as refrigerators or cookers. However the concept is viable in terms of technology: currently Amazon is partnering with appropriate organisations who specialise in this field at a location outside Cambridge (a technology hub). The vast majority of items stocked by Amazon are less than 5 lbs in weight. In a sign that there must be something substantial behind the concept, companies such as Google, Flirty and Wal-Mart have also applied to US regulators for permission to engage in similar testing procedures to that of Amazon.
Amazon have actually been beaten to the punch by Seven Eleven. This retailer recently used a drone to deliver a customer order in Reno, Nevada (to a customer located within one mile of the store).

What are we to make of it all? Science fiction gone wrong? A logical incremental development in mobile technology? The face of the future? The lunatics taking over the asylum? Firstly we can assume that governments will adopt a very cautious and risk-averse approach to the granting of licenses for the use of UAV’s. This will be driven by the ever-increasing risk of terrorism activities that are happening in many parts of the world. Sadly the concept of using drones is something that fits into the plans of terrorists in order to disrupt 9at best) or cause material damage (at worst). It is highly unlikely that we shall see hundreds of drones clogging up the lower air space and resembling conventional traffic congestion.

Secondly I presume that there will be a premium price for the use of such services – particularly if there are such major restrictions on the use of drones.
Thirdly it is more likely in my view that instead of delivering to the home or the office (and if permission is granted) retailers like Amazon will deliver to a designated and secure landing zone at a “drop-off / pick-up” point. Such a facility is likely to resemble a warehouse type construction and the shopper will have to make his / her way there to pick up the item. In some ways this defeats the original proposition of being able to deliver to the customer within thirty minutes. It also adds a layer of complexity to the proposition.
Fourthly practical issues such as hi-jacking (people re-directing the drones to another site or taking down a drone) would have to be fully tested in order to eliminate / reduce such risks.
Fifthly while it could be argued by idealistic environmentalists that it may reduce the number of vans and motor bikes in congested areas, this is unlikely to happen in the foreseeable future. It could equally be argued that this development simply transfers such congestion to the air.

Finally it can be argued that the use of drones would be better served in the context of inventory and warehouse management within the supply chains of companies in general and retailers in particular. Imagine the benefits that could accrue from the speedier and more accurate movement of inventory around a warehouse or distribution centre. This could to real efficiencies and savings for the company. This could be passed on (unlikely perhaps in its entirety) in the form of lower prices to the shopper.
It will be interesting to see what happens over the next couple of years.

Fly me to the moon
 Let me play among the stars
 Let me see what spring is like on
            Jupiter and Mars…………

//Sean Ennis
La La La La La La La La……..

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