Researchers from the University of Waterloo conducted a study on the desirability and reality of using drone delivery for e-retailers. The study looks at the cost and effectiveness in certain population areas and locations.
(Source: Pxhere)
For the study, the researchers focused on New York City and drone delivery. They separated boroughs based on population size. They chose NYC because Amazon started its two-hour delivery in the city and may adopt drone delivery.
The team analyzed the tradeoffs between distribution costs, revenue and the difficulties behind drone delivery. Difficulties include customer preferences, regulatory preferences and technological limitations.
The team found that the optimal number of drone test facilities in NYC is three. Three facilities would cover 75 percent of NYC and 34 percent of the population. A fourth facility would cover 84 percent of NYC and 38 percent of the population. This small increase in the population served would not cover facility costs, making a fourth facility unfeasible.
Government regulations, technology limitations and service charge decisions play a vital role in optimal configurations and target markets for drone delivery.
With today’s drone landing capabilities, drone delivery may not be possible in a densely populated area because demand would be very high. But with the right technological capabilities and regulations, e-retailers could reach smaller markets and price-sensitive customers through discounts on drone delivery orders.
The study can help companies make educated decisions when considering integrating drone delivery. Companies can use this data to decide how many facilities to open, which services to offer at each facility and in certain areas.
This study was published in Transportation Science.
