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: Smart packaging: “Hi! I am your package“...
20.07.2020   #online trading #packaging

Smart packaging: “Hi! I am your package“

Interview with Alexander Cotte, Co-Founder and CEO of LivingPackets

The delivery service rings the doorbell but nobody is home. Recipients receive damaged products and cardboard boxes end up in the trash after just one use – these are just some e-commerce weak points and challenges that the German-French ...

Thumbnail-Photo: Recycling packaging materials for the sake of the environment...
20.07.2020   #sustainability #packaging

Recycling packaging materials for the sake of the environment

What the German Packaging Act (“Verpackungsgesetz") means for retailers and manufacturers

Images of plastic accumulation zones in the world's oceans, dying animals, ice melting at the poles and extreme drought – as climate change intensifies, so too does public discourse. Garbage and packaging waste are top issues and play ...

Thumbnail-Photo: Ecommerce searches on Google
29.05.2020   #online trading #e-commerce

Ecommerce searches on Google

Nearly 50 percent drive no clicks to the shops

Nearly half of all ecommerce-related searches on Google never result in consumers clicking through to a retail or other website according to a new study by Searchmetrics. The company says these findings tie-in with retailers who are not seeing the ...

Thumbnail-Photo: Key elements of successful supply chain management...
15.07.2020   #personnel management #logistic systems

Key elements of successful supply chain management

5 tips to optimize your supply chain and mitigate risk

A chain consists of many small individual links and only works as a whole when these links connect effectively. After all, a chain is only as strong as its weakest link. The same principle applies to supply chains. What are the best practices for ...

Thumbnail-Photo: COVID-19 initiates surge in late payments in the retail market...
27.04.2020   #brick and mortar retail #real estate

COVID-19 initiates surge in late payments in the retail market

New research by Trepp about the retail commercial real estate sector

Trepp, a provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released a research report on the retail commercial real estate sector amidst the coronavirus pandemic. The ...

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: 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: Outdated last-mile delivery technology
07.07.2020   #logistic solutions #mobile computing

Outdated last-mile delivery technology

Transportation and logistics companies losing customers

Transportation and logistics (T&L) companies are losing customers and missing opportunities to expand their business due to outdated last-mile delivery technology, according to a new global research report by SOTI, which looks at the ...

Thumbnail-Photo: Electronic bill of lading solutions to enhance safety and efficiency...
02.07.2020   #supply chain management #coronavirus

Electronic bill of lading solutions to enhance safety and efficiency

Consumer Brands spearheads contactless delivery task force

The Consumer Brands Association announced that it has brought together 23 consumer packaged goods (CPG) companies and retailers to launch a new task force that will study the impact of a contactless pick-up and delivery protocol to create greater ...