The future is limitless.
For a fee, drones could deliver food and groceries right at a customer's doorstep from favorite restaurants and retailers.
Amazon has talked about the same idea in the past. But Alphabet's moon shot factory, known as X, has been dabbling in drones for years.
Drones delivering products would reduce human labor costs and wait times, but pricing would be the key to success.
It is estimated that Wing Marketplace would charge customers a $6 drone delivery fee. The client base could include companies such as Chipotle Mexican Grill, Domino's Pizza, Starbucks and Whole Foods.
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Drone deliveries may fundamentally transform the landscape of e-commerce.
The e-commerce shipping business is primarily operated by FedEx and United Parcel Service, which have a stranglehold on the business because there is no cheaper and faster alternative for even shorter distances.
All that could change when these drones become fully functional, which would provide massive tailwinds for Alphabet.
Although Alibaba, Amazon or JD.com can launch drone services for its own deliveries, Alphabet's Wing Marketplace offer this on a much larger scale. This is because not every e-commerce portal or even traditional retailer going online can afford to invest money in drone technology and have their own branded drone delivery service.
Once the idea is placed on a marketplace model, drones will be available for any company that wants to use this service.
Just like traditional deliveries, the economics of delivery in the case of drones are driven by route density and drop size.
Amazon has said that 86% of its packages weigh less than 5 pounds. That is essentially the target for drone deliveries.
As for distance, Walmart has mentioned that about 70% of Americans live within five miles one of its stores. This holds great promise for drone delivery prospects.
Economics, will clearly be a key driver for the success of the initiative.
In a report by ARK Invest, analysts said that Prime Air could cost Amazon just 88 cents per delivery.
However, Amazon will charge customers a bit more than that.
This could earn it handsome returns on the investment in drone infrastructure and offer significantly cheaper same-day delivery.
For 5-pound loads, UPS Ground service charges anywhere between about $8 and $46 for guaranteed day-definite delivery, typically in one to five business days.
FedEx Ground service is also competitively priced.
Amazon Prime Now, which comes with an annual subscription, promises free two-hour delivery, while one-hour delivery costs $7.99. By using Wing Marketplace, companies can use drones to deliver their goods to customers.
Of course in order for this experiment to succeed, a few challenges need to be quickly sorted out.
Drone design, launch mechanism, flying and landing issues at delivery addresses, and software for accurate and safe flights are some of the essential factors that Alphabet must quickly address.
The market has already seen the debacle of a commercial drone, Karma, sold by GoPro. Alphabet will probably take it slow and gradually give shape to its plans.
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