JD.com is expanding its drone delivery program (JD)

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After launching its drone delivery program in June, China-based e-commerce company JD.com is looking to expand to 100 regular drone delivery routes by the end of 2017, reports Bloomberg.

If JD.com can bring its drone delivery service to more portions of China, the company could pose a bigger threat to its rival Alibaba as it cuts down on transportation costs and reaches more of China's rural population.

Drones significantly cut back JD.com's spending on logistics. The drones will lower delivery costs by as much as 50% to under $0.08 per package, according to the vice president of JD.com. The drones can transport packages of up to 33 pounds at speeds of up to 34 miles per hour over a maximum distance of 12 miles. 

In all, the drones are able to cut down the total delivery time between distribution centers from several hours to under 20 minutes. This can help JD.com reduce costs associated with last-mile fulfillment, which could be vital as its gross merchandise volume (GMV) continues to grow — GMV rose 47% year-over-year (YoY), totaling $24 billion during Q2 2016.

JD.com is tapping into underserved markets with its drone program. The company is focusing specifically on rural areas of China where last-mile fulfillment is often met with logistical challenges, like unmarked roads or limited space for delivery trucks. Reaching this portion of the country could help JD.com onboard more customers and could potentially provide a lift in sales, giving it an important advantage over Alibaba, which is still testing its own drone program. 

Alibaba and JD.com make up 47% and 20% of the total market, respectively, according to Business of Fashion. While JD.com is still behind, its early roots in drone delivery make it a powerful competitor for Alibaba as both companies try to increase e-commerce penetration throughout urban and rural areas.

Drones turned the corner in 2015 to become a popular consumer device, while a framework for regulation that legitimizes drones in the US began to take shape. Technological and regulatory barriers still exist to further drone adoption.

Drone manufacturers and software providers are quickly developing technologies like geo-fencing and collision avoidance that will make flying drones safer. The accelerating pace of drone adoption is also pushing governments to create new regulations that balance safety and innovation.

Safer technology and better regulation will open up new applications for drones in the commercial sector, including drone delivery programs like Amazon’s Prime Air and Google’s Project Wing initiatives.

BI Intelligence, Business Insider's premium research service, has compiled a detailed drones report that forecasts sales revenues for consumer, enterprise, and military drones. It also projects the growth of drone shipments for consumers and enterprises.

The report details several of world’s major drone suppliers and examines trends in drone adoption among several leading industries. Finally, it examines the regulatory landscape in several markets and explains how technologies like obstacle avoidance and drone-to-drone communications will impact drone adoption.

Here are some of the key takeaways from the report:

• We project revenues from drones sales to top $12 billion in 2021, up from just over $8 billion last year.
• Shipments of consumer drones will more than quadruple over the next five years, fueled by increasing price competition and new technologies that make flying drones easier for beginners.
• Growth in the enterprise sector will outpace the consumer sector in both shipments and revenues as regulations open up new use cases in the US and EU, the two biggest potential markets for enterprise drones.
• Technologies like geo-fencing and collision avoidance will make flying drones safer and make regulators feel more comfortable with larger numbers of drones taking to the skies.
• Right now FAA regulations have limited commercial drones to a select few industries and applications like aerial surveying in the agriculture, mining, and oil and gas sectors.
• The military sector will continue to lead all other sectors in drone spending during our forecast period thanks to the high cost of military drones and the growing number of countries seeking to acquire them.

In full, the report:

• Compares drone adoption across the consumer, enterprise, and government sectors.
• Breaks down drone regulations across several key markets and explains how they’ve impacted adoption.
• Discusses popular use cases for drones in the enterprise sector, as well as nascent use case that are on the rise.
• Analyzes how different drone manufacturers are trying to differentiate their offerings with better hardware and software components.
• Explains how drone manufacturers are quickly enabling autonomous flight in their products that will be a major boon for drone adoption.

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