You’ve seen the video—a tiny helicopter airlifts a package from an Amazon warehouse to a customer in 30 minutes or less. Now you and commercial brokers everywhere are asking questions like:
The end of retail as we know it?
“Did I just dream that?”
“Should I sell my Best Buy stock?”
“Is this the end of retail as we know it?”
The answers to the above questions are no, no and no. But that doesn’t mean you can’t help your retail clients by better understanding the threats they face from online vendors.
Death by showrooming?
A few years ago, retailers like Best Buy began to suffer from “showrooming”—shoppers would try out merchandise in the store, decide what they wanted, and buy it online at a lower price. Without the overhead of a physical store, it seemed like Amazon and other online vendors would price brick-and-mortar retailers out of existence.
Best Buy’s stock price
nearly quadrupled in 2013.
nearly quadrupled in 2013.
The bankruptcies of Borders, Circuit City and Linens & Things in the wake of the 2008 financial collapse confirmed the gloomiest forecasts. Sears and J. C. Penney remain in dire straits today.
But retailers weren’t going down without a fight. Many guaranteed they’d equal online prices. Others emphasized personal service online vendors couldn’t match, and capitalized on shoppers’ desire to take merchandise home immediately. “Buy it online, and pick it up in the store” became the anti-showrooming battle cry.
The strategies worked. Best Buy, once given up for dead, saw its stock price nearly quadruple in 2013.
Death by drone?
Okay, but if getting merchandise straight into shoppers’ hands is the biggest advantage brick-and-mortar stores have, what happens if they can have it delivered from Amazon in half an hour?
Our prediction? Not much—for three reasons:
1. Drones can’t deliver anything much larger than a tool box. No one is going to get their home entertainment system delivered by drone.
2. Drones won’t be flying until 2015 at the earliest, and that’s only if local authorities and the FAA can hammer out airspace regulations that let them fly without endangering manned aircraft.
3. 30-minute drone delivery won’t be free. Its cost will probably deter most shoppers.
But, if and when the day comes, what kind of retailers might actually be threatened by drone delivery? Here’s our list, from least to most endangered:
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