News • 06.02.2020

Demand for drone delivery in e-retail is high

Ability to meet that demand is low

A delivery drone over water in front of skyscrapers...
Source: PantherMedia/jukai5

Consumers want what they want, and they want it now. Drone delivery has long been talked about as an option to satisfy consumer delivery demands, but how realistic is it? New research in the INFORMS journal Transportation Science looks at how possible and desirable it is to use drones for delivery for e-retailers considering cost and effectiveness in certain population areas and in certain locations.

The study, conducted by Gohram Baloch and Fatma Gzara, both of the University of Waterloo in Ontario, Canada, uses New York City as an example and looks at data surrounding the Manhattan area. The authors separated the area into boroughs based on population and size. Baloch and Gzara said they chose New York because the world's largest e-retail company, Amazon, first started its 2-hour delivery services in the Big Apple.

"We analyze the tradeoffs between distribution costs and revenues under varying social difficulties with drones like customer preferences and regulatory and technological limitations. We then can make educated decisions on how many facilities to open, which services to offer at that facility and which services to make available to customers in certain areas," said Gzara, a professor in the Department of Management Sciences at Waterloo.

The optimal design for the test locations in New York City, based on all factors, is three drone facilities covering 75 percent of the New York City area and 34 percent of the population. Opening a fourth facility increases area and population coverage to 84 percent and 38 percent, respectively, but the increase in operation cost is not enough to cover the facility costs.

The modeling and analysis can be used by e-retailers to analyze the economic desirability of offering a drone package delivery and its effect on their network. Regulatory bodies can use the work to test the impact of regulations on potential adaptation of drone deliveries by the e-retail industry.

"Our results show that government regulations, technological limitations, and service charge decisions play a vital role in optimal configurations and drone target markets," continued Gzara. "Under current drone landing capabilities, a drone delivery service may not be possible in a densely populated area like Manhattan where demand for such a service is expected to be high."

Baloch and Gzara said under the right technological capabilities and regulations, e-retailers can reach smaller markets and more price sensitive customers by possibly offering discounts on drone delivered orders.

Source: INFORMS journal Transportation Science

related articles:

popular articles:

Thumbnail-Photo: Warehouse management: optimized, automated, product-oriented...
15.10.2020   #logistic systems #logistics

Warehouse management: optimized, automated, product-oriented

Tips on how to ensure warehouse optimization

Digitization, e-commerce, increasing customer demands, and expectations – factors that not only impact retailers but also affect the way warehouses are organized. In this interview, Johannes Tress, Co-Founder and Managing Director at everstox ...

Thumbnail-Photo: How retail drone delivery may change logistics networks...
08.09.2020   #logistics #delivery

How retail drone delivery may change logistics networks

Chance for retailers: best-possible delivery-time guarantee zones

Researchers at The University of Texas at Dallas say drone technology has the potential to be a genuine game changer in the retail industry, with its promise to enable retailers to offer unheard-of delivery lead times and near-perfect delivery-time ...

Thumbnail-Photo: Last mile: What do you have to do?
14.08.2020   #supply chain management #logistics

Last mile: What do you have to do?

How to win the battle for customer experience excellence in both the first and last mile of delivery

As recent events have caused major supply chain disruption with many physical stores abandoned, e-commerce has never been more under the spotlight. The double-digit growth the industry has seen over the last few years looks set to continue, ...

Thumbnail-Photo: Getting a taste for grocery deliveries
14.08.2020   #e-commerce #customer satisfaction

Getting a taste for grocery deliveries

What are the best online grocery delivery options?

Bread, cucumbers, tomatoes, pasta, butter ... Brick-and-mortar stores are no longer the only place where consumers turn to for their groceries. The COVID-19 crisis has spurred a boom in food delivery services. So how do groceries end up in your ...

Thumbnail-Photo: Delivery services: consumer and climate benefits...
14.08.2020   #e-commerce #customer satisfaction

Delivery services: consumer and climate benefits

Sustainable logistics solutions for last mile delivery

Convenient, fast, and affordable. By now, "sustainable" has also been added to the list of what makes for the perfect online ordering process. That’s why retailers and delivery services must rethink their ...

Thumbnail-Photo: Same-day delivery from 76 Costco warehouses across Canada...
03.08.2020   #food retail #delivery

Same-day delivery from 76 Costco warehouses across Canada

Partnership between Instacart and Costco

Instacart and Costco announced the companies have partnered to launch same-day delivery from 76 Costco warehouses across Canada. Following a successful two-month pilot in select Ontario warehouses, the nationwide collaboration brings Costco's ...

Thumbnail-Photo: Contactless robotic grocery delivery service...
06.10.2020   #delivery #robotics

Contactless robotic grocery delivery service

Save Mart’s flagship store in partnership with Starship Technologies

Save Mart has announced the launch of an on-demand grocery delivery service to its guests at the flagship store in Modesto, California in partnership with robot delivery company Starship Technologies. Marking the one-year anniversary of its opening ...

Thumbnail-Photo: ALDI to trial click and collect
29.09.2020   #services #food retail

ALDI to trial click and collect

The supermarket is testing its first UK click-and-collect services

The supermarket is currently running a trial of the service for Aldi colleagues from a store in the Midlands and plans to extend that to customers in the coming weeks.During the current trial, Aldi colleagues can choose from a full range of grocery ...

Thumbnail-Photo: Door-to-door delivery and returns service
13.08.2020   #online trading #fashion

Door-to-door delivery and returns service

Asda trials George parcel returns via home shopping deliveries

Starting last week, Asda has launched a two-store trial allowing customers to conveniently return George parcels at the same time as they receive their weekly shop.Customers in York and Milton Keynes can now return George online purchases for free ...

Thumbnail-Photo: Stay on top of things with Axis
21.09.2020   #online trading #customer satisfaction

Stay on top of things with Axis

Process visualization of your deliveries

Especially in times of increased shipping volumes, returns are creating unexpected challenges for online retailers and fulfillment providers. Efficient commissioning and shipping processes are particularly important here. In the webinar by Axis ...

Supplier

Axis Communications GmbH
Axis Communications GmbH
Adalperostraße 86
85737 Ismaning