The Idea of Drone Delivery Services

Subject: Logistics
Pages: 3
Words: 933
Reading time:
4 min

Concept and Vision

The idea of drone delivery services came from the Internet; I have no experience with this market. Perusing recent articles on the web, I discovered the growing popularity of package delivery using drones. For example, I discovered that Amazon Prime Air delivery is becoming increasingly popular and has transformed the company’s business, spurring growth and new investment opportunities. Also, the Federal Aviation Administration (FAA) recently authorized Google’s Wing Aviation to start delivering packages using drones. Drone delivery is a viable business opportunity because it is a support service to e-commerce services, one of the economy’s bright spots. In the United States, for example, e-commerce sales have almost doubled in half a decade to exceed $500 billion. Drone delivery is particularly compelling because it is entirely automated, makes the world a better place by facilitating fast door-to-door package delivery, and promotes the use of innovative technology.

Market Analysis

Market research about the need, not the entire market, can be used to understand this opportunity. Drone delivery will offer services within the courier services industry. The market for drone transportation is big; it is worth about $29 billion. Presently, the industry is dominated by firms like UPS, FedEx, and DHL. The courier services market is attractive because it continues to grow as e-commerce expands. The specific segment of the courier services market that I will be pursuing is the delivery of small packages. Drones have limited capacities and can lift light packages only. Therefore, my drone delivery services will focus on small electronics like mobile phones, parcels, and any item that weighs a few pounds. Once the item is sealed, it can be sent to specific coordinates within record time. Qualitative market research can be done to describe this industry. Over the past three years, the courier services market has experienced significant growth owing to the global expansion of e-commerce. However, drone delivery did not become viable until recently when Amazon started experimenting with it. The industry is expected to continue growing to reach billions of people globally.

Customers and Customer Development

The target customers for my business include online shoppers, institutions, and small businesses. For example, a small company that sells flowers can use my services to deliver a purchase to a customer within a short time. Online shoppers can also use my drone delivery services to get their products much faster as opposed to using traditional courier services. Institutional customers like banks can also use my services to send urgent parcels to customers. For instance, the bank can send vital documents to a customer using my drone delivery services. Customers will be developed through the provision of reliable and reasonably priced services. Bureaucratic processes will be eliminated so that customers can place orders in record time. Customers are willing to pay to have their services delivered safely, swiftly, and conveniently by all means.

Competition and Positioning

As noted, drone delivery as a service has not yet picked momentum. Currently, Amazon, through its Amazon Prime Air services, is the only dominant player in this segment. Later in 2019, Google (Alphabet) will introduce Wing Aviation, a drone delivery service that has already received FAA approval. These competitors have the advantage of powerful technology. Their weakness is a lack of focus; they have diversified operations. Amazon Prime Air is the largest player; it serves 90 percent of the market and its sales are growing. In the future, traditional courier services like UPS and FedEx might also want to develop drone delivery capabilities to avoid losing customers. Notably, technology is the main barrier to entry for new firms. Partners and allies can help me deal with competition by optimizing the technology that my drone delivery services use and helping me get delivery contracts with major intuitional customers.

Business Model

My drone delivery services will use two business models to generate cash. The first one is some drones will be set aside for field deployment. These drones will collect packages and deliver them directly to the desired destination. For these drones to work, customers sending parcels will visit my company’s website (or mobile application) and provide information about the product to be delivered. They will indicate the product’s weight, description, location, and destination. A technician will send a nearby drone to that location to pick and deliver the package (it will work like a taxi-hailing service, Uber). Second, parcels will be delivered to our premises from where they will be dispatched to desired locations. Payments will be calculated based on the distance covered and the weight of the delivered parcel. Payments will be made before delivery is done. The venture is likely to be profitable. The main concern at present is vandalism; mischievous persons might shoot down the drones and steal the contents that they are transporting.

Learning and Adaptation

I have learned that one can discover potential business opportunities by perusing articles online. Drone delivery is a true business opportunity. Amazon Prime Air’s success is an indication that the idea can work. Also, this is the best time to start offering the service because a few firms have taken up the opportunity; one entering the market now will enjoy the benefits of first entry. Drone delivery will become a main service in the future as e-commerce activity grows. However, there is a need to address vandalism concerns. Since the drones will be transporting small, valuable items, their destruction by mischievous persons can lead to significant losses. Drones are small and can be overpowered with the application of small force. Once this issue has been addressed, the opportunity can be explored fully.