While drones have been around for decades, the commercial use of this technology is a fairly new concept for various businesses. The rise of commercial drones in the recent years triggered high hopes for incorporating such technology in a range of sectors. However, a lot of preparatory work is required for the market to evolve and for the technology to be incorporated in businesses’ operations.

Initially reserved for military use, unmanned autonomous vehicles or drones are now being considered for the commercial marketplace. In recent years, commercial drones have witnessed significant product innovations and are now being utilized in various industries. Equipped with cameras, commercial drones are used for mapping, delivery, inspection, and surveillance. Valued at US$ 609 million in 2014, the market is forecasted to reach US$ 4.8 billion by 2020. These machines now have the potential to transform the traditional business models by including a range of opportunities across various industries including infrastructure, agriculture, insurance, security, etc.

Infrastructure

An increased usage of commercial drones has been witnessed in the infrastructure industry. Commercial drones are cheaper than manned aircraft and have the ability to gather data more precise and faster than human surveyors. This helps the construction workers to track the work progress with a higher degree of accuracy. Further, drone monitoring of construction sites enables workers to keep a check on material storage and handling, thereby preventing wastage of materials. While the use of commercial drones in the infrastructure industry will not have any effect on employment, it is likely to reduce overtime costs by keeping a track of the construction progress and eliminating rework or fixes.

Agriculture

In agriculture, farmers use commercial drones to reduce their dependence on extra resources required to produce crops. Drones have the ability to survey fields, spray pesticides, and also collect data required in reviewing crops, with data collection being their most promising utility. This saves farmer’s time and money required to evaluate acres of land manually and also helps in getting timely information about the status of their fields to improve crop health. Commercial drones, thus, help overcome a huge challenge in farming, i.e., limited efficiency in monitoring huge areas of land. The use of commercial drones in agriculture is likely to lead to farming becoming data-driven, leading to better productivity and yield.

Transport

Commercial drones are also increasingly used in the transport industry, particularly for the delivery of goods in the e-commerce sector. Retailers such as Amazon and Walmart have been focusing on setting up the infrastructure required for delivering products to customers. Drone delivery is now considered central to Amazon’s long term shipping plan, and is likely to modify the company’s cost structure. The introduction of Amazon Prime Air, Amazon’s drone delivery system, is likely to lower the cost of a same-day small package delivery to US$ 1. In addition, convenience store chain, 7 Eleven, and fast food chain, Domino’s Pizza, recently partnered with Flirtey, a drone delivery company, to initiate the delivery of food to customers. The companies believe that drone deliveries will help them cut down their delivery cost and save traffic time to offer efficient delivery services.

Insurance

The insurance sector is also an early adopter of the drone technology. Commercial drones are being used to record details about a location or building to gather useful information for risks assessment and claims processing. With the ability to view difficult angles, take high resolution photos and videos, and easy portability, commercial drones can enter places such as burned out homes or chemical spills more easily than insurance adjusters, thus, saving insurance adjusters from entering potentially dangerous areas. Drones can also speed up the surveying process and save costs by covering large areas of the property in a short span of time, thereby employing lower number of adjusters. In addition, drones are useful in monitoring areas prone to natural disasters, making it easier for national government working with insurance companies to prepare for catastrophe and prevent damage and casualties. For instance, in January 2016, Aviva PLC, an insurance company, deployed drones to survey flood damage in the UK. The drones were used to provide a macro view of the area and guide the company’s staff on the ground. While it is too early to say whether commercial drones will be able to replace insurance adjusters, they are already used to speed up the inspection process and offer more detailed property data.

EOS Perspective

The drone technology has started to a find its home in the commercial sector. Various industries have initiated the adoption of drones with a view to increase efficiency, lower operational costs, speed up several links within the supply chain, and obtain valuable information. In the near future, the commercial drones industry is likely to gain more traction, particularly by large scale industries such as agriculture and infrastructure. This, coupled with the ongoing technological innovations such as better sensor technology, seamless software function, better integration, etc., is likely to boost the commercial demand for such machines.

Having said that, the industry will need to overcome certain regulatory challenges to go beyond the currently nascent stage of development. While on the one hand, the development of the regulatory framework has sparked hopes for industries willing to adopt the drone technology, on the other hand, the stringent rules regarding the usage of such technology are likely to cool down the industries’ enthusiasm to some extent. However, though the initial set of rules is restrictive in nature, it is believed, that the regulations might change once the industries exhibit drones operations in a safely manner. For instance, the rule regarding the weight limit might start accepting waivers in certain categories, thereby prompting the regulators to alter the ruling. While it is clear that in its stage of infancy, the commercial drones industry is expected to face regulatory uncertainty, in the long run, with a possible evolving regulatory regime, the business potential of the commercial drones could be game-changing.