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Contactless Delivery Set to Gain Traction on Coronavirus Scare

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With the coronavirus pandemic spreading unabatedly across the globe, contactless delivery services are now well poised to gain traction. So far, the pandemic has infected at least 170,000 people and claimed more than 6,500 lives, worldwide.

The COVID-19-led lockdowns have disrupted businesses, particularly which are people-oriented, like retail, restaurants, online deliveries, etc.

Countries on Lockdowns as Coronavirus Spirals Out of Control

To contain the rapidly-spreading COVID-19 pandemic, governments around the world are undertaking several measures, including travel bans, guiding companies to allow employees to work from their homes, and imposing lockdowns. In Europe, countries like Italy, Spain, and France have announced lockdowns.

In the United States too, President Trump has urged people to avoid traveling, attending schools in person, frequenting bars and restaurants, and limit public gatherings to less than 10. The U.S. government is leaving no stone unturned to curb the spread of coronavirus, which has already infected 3,487 people and claimed 68 lives in the country.

Hence, this global quarantine situation is disrupting the entire demand-and supply-chain across all sectors. People are avoiding public places to avoid human touch, which is the main cause of the virus’ transmission. As a result, a recessionary situation is emerging globally.

Reportedly, several Amazon (AMZN - Free Report) sellers are running low on inventory, and factory closures in China and other parts of the globe will not allow them to restock products. This Zacks Rank #3 (Hold) company recently noted that it is running out of household-staple products, as more and more people are shopping online due to the coronavirus outbreak.

Contactless Deliveries Gaining Traction

People are even hesitating in availing door-to-door delivery services, as they fear the person bringing deliveries might have been infected with COVID-19.

This has prompted several online delivery operators in the United States to start contactless-delivery services, in order to prevent transmission of the virus between delivery drivers and customers. Further, the service will aid these operators to lure customers on growing hygiene awareness.

Postmates is the first company to roll out contactless delivery. The food and grocery delivery company has created a separate “Leave order at my door” option on its website and app. Similarly, grocery chain retailer Instacart has added a “Leave at My Door Deliver” option for contactless delivery.

Meanwhile, Uber Eats, the wholly-owned subsidiary of Uber Technologies (UBER - Free Report) , a Zacks Rank #2 (Buy) stock, is providing customers the options to leave a note to drivers for a delivery to be left outside their homes or delivery places. Other notable online delivery providers like Seamless and Grubhub (GRUB - Free Report) are reportedly following the same practice. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, pizza giants, Domino’s (DPZ - Free Report) and YUM! Brands’ (YUM - Free Report) owned PizzaHut are encouraging customers to provide instructions while placing orders. Another pizza chain operator, Little Caesars, is offering two contactless methods. Customers can either put instructions for drivers for home deliveries or pickup their pizzas from in-store heated compartments.

Drone & Automated Delivery Best Options to Curb Coronavirus Transmission?

Several online delivery operators have come out with contactless solutions to survive in this turbulent market. However, if the virus lingers for a longer period, the lack of delivery personnel will be a key headwind. Notably, Trump yesterday noted that the COVID-19-led social unrest might last well beyond August.

Therefore, we believe if the crisis stretches to the second half of this year, Internet-based delivery operators will resort to drones and automated delivery options. Remarkably, companies like FedEx (FDX - Free Report) and United Parcel Service (UPS - Free Report) are already testing their drones and automated delivery channels.

Since October 2019, FedEx has been testing its drone-delivery capabilities in Virginia, in collaboration with Alphabet’s (GOOGL - Free Report) Google Wing, another Zacks #3 Ranked stock. Furthermore, the company forayed in the autonomous delivery market last year by introducing its Roxo SameDay Delivery Bot for last-mile deliveries.

These apart, United Parcel Service has also received consent from the U.S. Federal Aviation Administration for drone deliveries. The company made its first drone delivery to WakeMed’s hospital last September. Also, the logistics giant has collaborated with autonomous tech start-up, TuSimple, and is testing self-driving trucks in Arizona.

Conclusion

The massive business disruptions caused by the coronavirus outbreak is expected to open up solid growth opportunities for contactless-delivery providers, particularly in the retail and e-commerce space.

Chinese companies, including Meituan Dianping, JD.com, and Ele.me, have ramped up their deployment of robots to deliver orders, in a bid to contain further spreading of COVID-19.

We believe the U.S. companies will follow suit, and deploy more autonomous and drone deliveries in the days to come. In addition, the current crisis will compel logistics and delivery-service companies to invest more in autonomous and drone deliveries, in order to reduce human dependence. This will also have a long-term impact in significant cost-savings for the companies.

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