Tony Hughes assesses the likely impact of drone distribution as new start-ups prepare to revolutionise the market
It might seem like a relatively niche proposition at present but don’t be fooled: the drone industry is moving fast. Many drone companies are start-ups with an arsenal of robotics, artificial intelligence skills and novel approaches. Such innovation could see them out-compete the larger ‘traditional’ logistics players – particularly in precision or niche markets.
To remain competitive and continue expanding their businesses, larger logistics providers will increasingly need to look for ways to incorporate drone propositions into their existing suite of services and product offerings. Though start-ups may offer competition to larger logistics companies during their early development, it won’t last. High growth start-ups, by their nature, want to be seen to be working alongside the main players to grow presence, access resources, establish their reputation and build credibility – thereby maximising company value rather than cash flow or immediate profits.
Is it realistic to think that a start-up business can radicalise a global and established market like logistics? The answer is yes. In today’s climate, it is not uncommon for a few start-ups to take a new model and totally revolutionise an industry. Consider the food delivery market currently evolving at lightning speed, with Uber, Just Eat, Amazon and Ocado. Uber is in a proven position to coordinate local drivers for cheap deliveries compared to the other players. Just Eat has a good offering acting as a front end to many suppliers who don’t have IT resources to go it alone. Ocado, and of course Amazon, are an increasing presence in fast delivery services too. Each has strong credentials and each has weaknesses. This makes for a superb upcoming battlefield where competition is on price, speed, delivery, adaptability, customer interfacing, social networking and most importantly, good relationships with food suppliers.
Is it realistic to think that a start-up business can radicalise a global established market like logistics? The answer is yes
When it comes to selling and negotiation, it’s all about securing win, win acquisition strategies; in the short term large and small players, provided they have the right skills, will successfully negotiate with and/or sell to each other. In the longer term, a default exit strategy for many IT or robotics start-ups is to be purchased by larger players, and that of course will need complex negotiation capability on both sides to achieve the best synergy.
Subcontracting and collaboration Though acquisitions will be tempting, subcontracting and collaboration will also offer valuable alternatives to the competition that would otherwise erode profits on both sides. The best deals with potential new partners will be those based on win-win.
When it comes to selling ‘potential’, the bigger the deal or the longer the contract, the more the buyer will require reassurance of product and company sustainability from the smaller start-up. It’s a key consideration that grows in importance the greater the number of people in the decision-making unit. Left unaddressed, it can escalate throughout the sales process leading to an eleventh-hour stall. Technical and product expertise on the side of the start-up are important but they are not a replacement for skilled selling and the ability to understand, and act appropriately within each stage of the buying cycle.