Feasibility of Drone business line of company and analysing current situation

Assignment Taken

Understanding drone delivery market and discussing way of implementation

Case Understanding

The courier company, which has a pan India presence, has decided to enter 'Hyper-Local Delivery space for local delivery. It has taken all the permission from the concerned department and licenses. The company identified the high cost of long-range drones, so it has decided to start this venture with short-range drones. The USP of this offering will be fast delivery and will be most helpful in metros where the delivery gets stuck due to heavy traffic. The company aims to establish the drone line of the business and, with time, become the market leader with continuous innovations. The Budget allotted for this drone department is 10 crore for 2021-22. The new venture can only be successful if it successfully establishes coordination between marketing, finance, HR, and IT. They can show the value addition it is adding to the clients.

BCS Solution Summary

For launching Drone delivery services, we will implement a focus strategy and will concentrate on one city- The financial capital of India: Mumbai. The reason for the selection of Mumbai will be discussed in the solution. The solution starts will analysing the demand of drone delivery in the global market; also analysing the forecasting demand for delivery of retail goods, food, postal and medical aids through drone delivery. Also, discussed the type of collaborations the company should focus on considering high capital-intensive business.

Solution

The evolution of the internet is an ongoing process. Whether it's online shopping, ordering foods, grocery runs or shipping packages, the consumer space increasingly relies on fast and reliable doorstep delivery. Drones allow for faster delivery times, more precision, and lower human costs involved with delivery. A delivery drone is an unmanned aerial vehicle (UAV) that transports goods, food, or other items.

The decision to focus on short-range drone delivery is logical since if it is successful, the business may consider long-range drone delivery. Long-distance, last-mile delivery are currently inefficient. They may be sluggish to move due to road congestion and a significant reliance on human drivers. Among these inefficiencies, the use of these drones for automated delivery can potentially cut the time and cost of last-mile deliveries.

Let’s see about the drone delivery market. If we observe Image 1, the forecasted global drone delivery market is about 1676 million US dollars. Asia -The pacific market accounts for 39% of the total market. Looking at the current market situation- China & India will account for the major chunk.  After studying Global drone package delivery system market size for various purposes- Image 2, presently in 2020, retail good delivery lead in drone delivery market; followed by medical aids delivery. It is estimated that this trend will continue till 2030 with the market size of drone delivery for retails good delivery to 9867.2 million U.S dollars while medical aid will be approximately 9012 million U.S. dollars. In the food delivery business, the drone delivery market size is estimated to be above 4000 million US dollars, while in postal delivery, it will be just above 3100 million US dollars.

Presently, in India, Only a few companies are aiming for drone deliveries due to regulations and complexity, while most drone companies focus on photography and leisure activities.

 

As the company has a current courier service pan India- drones will be added as an extension to the company’s fleet. All drones deployed will be outfitted with smart lockers that can only be accessed with an OTP given by the client, ensuring the safety of the contents during delivery.

Type of Business Collaborations:

Though the company should open it for B2B and B2C, the focus should be on partnering with B2B businesses rather than B2C. The reason for it is that a B2B service ensures consistent and high-volume transactions which can easily absorb the cost of the drone flight.

Collaboration options:

1. Hospitals and healthcare centres to procure pharmaceutical products; delivering critical medical supplies by drones
2. Food, Grocery delivery companies
3. Gifting companies

Reason for Selecting location Mumbai:
1) Purchasing power is the highest in Indian metros

2) Lot of B2B businesses whom we can collaborate

3) Huge crowd base of Early Adopters of new technology

4) People are ready to spend extra for saving time and convenience

5) If the model is successful, it can be easily replicated in other metro cities

6) It is one of the largest markets for food delivery firms

In the first year, the company will only focus on setting up drone delivery in Mumbai and on successful execution- it will focus on other metro cities.

SWOT Analysis:

Strength:

1. Established company in India. Providing courier delivery services pan India
2. First Mover advantage in drone delivery segment
3. Already established client Base
4. All regulation and licenses completed- which is a hurdle while entering the segment
5. Limited competition

Weakness:

1. No prior experience
2. Limited flexibility in pricing in this segment

Opportunities:

1. Possibility of becoming a star category revenue source for business
2. Creating a long term client relationship
3. Increase in cross-sell opportunity

Threats:

1)Changes in regulations can impact business

2) Entry of any technology advanced foreign player can hamper our position in the market

3) Capital intensive business

4) Many start-ups are aiming to enter this segment
 

Conclusion

The current market isn’t feasible to go with long-range drones in India, so the best option is to maximise collaboration with B2B partners to maximise the efficiency of short-range drones. In the first two years, the focus will be only on one city- Mumbai and the mission will be to have a successful, profitable business. Due to pandemics, spending in the health care sector is increasing; we can leverage this opportunity and partner with big hospitals and healthcare firms for fast deliveries. Also, in the era of 10 mins delivery- the entry of drones can be the game-changer in the food & grocery segment

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