Given a 50% premium for service and a sketchy customer experience, U.S. consumers have apparently had it with delivery service companies.
That could open up a big opportunity for drone delivery companies, according to the latest Ark Invest Innovations newsletter.
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“After peaking at 126% in April 2020, the growth in third-party food deliveries has decelerated dramatically to 6% on a year-over-year basis,” says Tasha Keeney, director of investment analysis at ARK.
Keeney points out, Domino’s has partnered with Eber Eats “in an effort to expand more customers,” as an example that eateries are responding by partnering up with delivery services to better compete and meet customers’ food delivery needs.
That strategy may not be enough, however, as ARK makes its case for drone technologies to start hitting critical mass and dominate the food and drink delivery market.”
Although it is still in its infancy, the drone delivery market is valued at $1.97 billion in 2023 and should rise to $11.6 billion by 2028, at an annual growth rate of 42.5% according to Mordor Intelligence. Companies like Google, Amazon, and Deutsche Post DHL Group are investing heavily in drone delivery, Mordor noted and the technology is showing signs of remarkable progress across the globe.
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In Shenzhen, China, the Chinese delivery company Meituan is filling the local skies with flying robots carrying pizzas for residents. Meanwhile, Dominos has already successfully tested its Flirty drone food delivery in New Zealand and other countries.
“While resistance to delivery fees should curb further price increases, ARK’s research suggests that drones could deliver packages for far less than their human counterparts,” Keeney said. "Should the FAA relax regulations on “beyond visual line of sight,” (i.e., where the drone delivery is not within the operator’s direct line of sight) drone services might attract consumers to food delivery once again.”
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