The Disappointing Growth of Delivery Drone Market By 2020 [REPORT]

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Neeraj M
I am a full-time Industry Analyst, covering mobile industry, writing about the giants and their growth performances, chasing the statistics like my dreams, and digging deep into the industry till I get a gold mine. 'Earned' my Masters in BioTech quite recently and giving wings to my thoughts without drinking RedBull.

Industries around the world are moving towards complete automation. Among all the proposed automation Robots and Drones are seen as the most promising machinery poised to bring the revolution. The rapid growth of drone market in the recent past has proved that both personal and commercial Drones will be instrumental in the industrial growth in future. Almost 3 million units of drones will be shipped in 2017, generating more than $6 billion in revenues, estimates Gartner. The estimated drones’ shipment figure will result in 34.3% growth in terms of revenues in 2017, albeit slightly lower than 35.5% growth the market recorded in 2016.

Despite all the regulations and other existing challenges the potential and popularity of drones have not diminished. The Drone industry is registering an impressive growth, the dynamics, however, have been very different when it comes to personal and commercial use.

According to the Gartner estimation, nearly 2.1 million units of drones were shipped in 2016, resulting in $4.5 billion in revenues. The revenue figure is estimated to increase to $11.2 billion by 2020, with a CAGR (Compound Anual Growth Rate) of nearly 37% in the next four year.


Personal Drones Are Eclipsing Commercial Drones

The overall drones’ market is expected to register a record growth in the next few years, though, the market for commercial drones will remain much smaller as compared to personal drones. By realising the real potential of drones may markets are already in the process of reforming their regulations to ease out the adoption of commercial drones. However, the process of going to take few more years as the commercial viability in yet to be laid out regulations needs to be tested.

On the other hand, personal drones are becoming more popular. Though the personal drones have its limitation of heights and backup, it’s being used successfully for many limited area monitoring and inspection purpose. Industries are actively using personal drones to monitor various activities in different areas. Besides, people are using personal drones for taking photographs and selfies, and for other entertainment activities.

But, on the flip side, the rapidly diminishing differentiation in the usage of personal and commercial drones has become a big challenge for the growth of commercial drones market. Cost benefits and unclear regulations are making people turn to personal drones and use it for commercial purposes as well.

Delivery Drones: Much Ahead of Time

Despite all the flourishing scenario of overall drones’ market, the much-anticipated delivery drones will fail to account a sizable share of the market. Gartner estimates that Delivery Drones will comprise less than 1% of total commercial drones shipments by 2020. One of the biggest reason behind such lukewarm performance of commercial drones would be the clear visibility of returns on investment. While delivery drones are interesting media personalities to write about it, the ground reality is entirely different. The cost of drones, operations cost, and delivery cost on a single package are aspects that yet to be evaluated.

“We expect that delivery drones will begin finding a niche in business-to-business applications first, particularly for internal services within one company where logistics will not be such a big factor,” said Mr. Van Hoy. senior research analyst at Gartner.


In a B2C market, delivering packages by drones could be fascinating, but how much it’s going to cost to each customer is a big question that probably Amazon could find it first.


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