Ele.me is first to bring food delivery service via drones to Shanghai, China

The unfettered prospect of having your food delivery carried out via drones has become a new reality. 29 May 2018 marked the first food delivery via drones in Shanghai JinShan Industrial Park by Alibaba’s Ele.me (饿了么).

Receiving the license from Chinese authorities to use drones to deliver food has made the competition between China’s two largest online food delivery platforms hotter than ever.  It takes barely 20 minutes from the moment your order is placed to your food arriving at your door – almost impossible with an electrical bicycle cramming through Shanghai’s congested traffic.

Chinese consumers are seeking more methods of convenience as lifestyles in urbanised cities become increasingly chaotic – a sentiment that super-fast drone deliveries can tap into. According to GlobalData’s Q4 2017 consumer survey, on average 61% of Chinese consumer agreed that it is the convenience factor that makes purchases through online services more attractive. Services such as Ele.me’s drone deliveries capitalise on this need for convenience by offering consumers what they want as soon as they need it.

There are 17 routes within the Shanghai JinShan Industrial Park, covering 58km². However, the drones don’t deliver the food straight to your door. Automation covers 70% of the delivery route, and two delivery personnel will be in charge to load the takeaway onto the drone and unpack and deliver to the customer’s front door. Humans would only need to cover 15% of its routes, lowering operating costs.

Hitting delivery goals

Many reviews of Ele.me’s delivery service have been poor in urban areas of China, especially in the first-tier cities of Shanghai, Beijing, Guangzhou and Shenzhen due to high levels of congestion on the roads, with peak times taking up to 90 minutes for delivery according to reviews on Zhihu. The initiation of drone delivery will ignite the ‘future of logistics’ as described by Ele.me’s COO JiaKang.

Ele.me’s founder Xuhao Zhang announced targets of ‘making everything 30 minutes’ in the next nine years to come at a 2017 board meeting. The prospect of ordering your dinner after work and it being ready at your door the minute you get home is simply amazing.

Operational effectiveness

Over 40% of ‘blue collared workers’ (labour intensive jobs) work between 0-20 hours of overtime per week from the standard nine to five work day. Furthermore, 21.3% work over 30 hours of overtime per week, and 3.5% work over 60 hours of overtime.

In context – for a seven days week that’s a staggering estimate of ten hours of overtime per day, according to Xinhua News. There are 15,000 workers for Ele.me and it is estimated that 25% work 30 or more hours of overtime per week. This is mostly the delivery personnel, as they depend on the commission of 2RMB per order they earn to make ends meet.

With the introduction of automated drones for delivery being able to cover both congested and the most rural of areas in such a big country is a step forward. It not only meets the requirements of a time-poor urban consumer, but creates new opportunities for consumers in rural areas to be able to access products and services that are not usually readily available.

Automation of food delivery should not be seen as a replacement for workers, however, but as a helping hand to those in labour intensive jobs, to become more efficient and better placed to cost-effectively meet the convenience of today’s consumers.

Related links

https://www.globaldata.com/store/report/cs1712ts–trendsights-analysis-next-generation-shopping-creating-next-generation-retail-experiences-in-the-digital-age/

For more insight and data, visit the GlobalData Report Store – Food Processing Technology is part of GlobalData Plc.