Drone Delivery: By The Numbers

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Drone Delivery: By The Numbers

What do medicine, batteries, and forgotten anniversary gifts have in common?  They are the most likely items consumers will want delivered by drone once that service is available.  At least, that’s the verdict from the consumers I surveyed in August and September of this year. In my post Drone Delivery: How Much Would You Pay?, I ran a poll with three simple questions:

  1. What’s the maximum amount you would be willing to pay for a package delivered by drone?
  2. Which of ten items would you want delivered in 30 minutes?
  3. Under what circumstance would you need something so quickly that you’d pay top dollar for it?

These are the topline results.  You can see the companion SlideShare presentation with more complete graphs and charts of the data here.

The max you’d pay?  First, I wanted some base data on how much people would pay for drone delivery.  So, I asked if consumers were willing to pay for the service and whether they wanted to pay a flat fee or a percentage of the price of their purchased items.  More than three-quarters of respondents (82%) told us they would be willing to pay (vs. 18% who said they wouldn’t), and the largest majority of those who’d pay (62%) said they would prefer paying a percentage of the item’s purchase price (vs. 18% who said they would rather pay a flat fee).

When we asked those who were willing to pay for the service how much they would be willing to pay, we saw big differences in preference. For instance, as I mentioned, only 18% of respondents said they’d prefer a flat fee, and 80% of those people said they wouldn’t pay more than US $50 for delivery.  That’s not a lot more than express overnight delivery fees. I doubt these consumers will be using fixed charge drone delivery services.

For those respondents who indicated they’d pay a percentage of an item’s price, more than half (51%) said they would pay up to 10% of an item’s purchase price.  Most of the rest (43%) said up to 20%, and only 6% said up to 30%.  It seems that a percentage charge could leave a delivery service with losses if the delivered items aren’t high priced.

Items you’d want delivered?  Second, I was curious to know what items consumers would likely purchase and want delivered by drone. I reviewed online shopping trends to find most popular product categories and top purchase drivers – keeping in mind the items had to fit the following drone delivery requirements:

  • The order must be small enough to fit in the drone’s cargo box
  • The items must weigh less than 5 lbs.

There were clear winners and losers in the list of items consumers would want delivered in 30 minutes or less (see Figure 1).

FIGURE 1 – Which of 10 Items Would You Want Delivered in 30 Minutes?

Drone Deliver Fig 1

 

Respondents could choose as many items as applies.  Nearly three-quarters (72%) would use drone delivery to have a gift delivered.  Over half (57%) chose electronics.  Food and medicine were next highest on the list at 45% and 38%, respectively.  Batteries were the most mentioned item in the ‘other’ category.

Food may not be a good candidate for drone delivery.  Whether from the supermarket, mini-mart, fast food joint, or other restaurant, food is generally very inexpensive per pound.

Circumstances under which you’d pay top delivery dollar? – Third, I wanted to know under what circumstances consumers would need something so quickly that they’d pay top dollar to have it delivered quickly. I looked at the same online shopping trends noted above for the most popular categories and top purchase drivers. Results appear in Figure 2.

FIGURE 2 – Under what circumstance would you need something so quickly that you’d pay top dollar for it?

Drone Deliver Fig 2

 

You can see that respondents picked ‘emergencies’ at 66% and ‘in trouble / need it quick’ at 64% as the most likely circumstances that would trigger the use of a drone delivery service.  An ‘emergency’ is a subjective term that can mean just about anything, including the third most likely circumstance of a last minute anniversary or birthday gift – especially if you are desperate and have forgotten it.

Bottom line – From this small study I see three interesting insights:

  1. For the most part, consumers are willing to use a drone delivery service, but price matters.
  2. Consumers are not willing to pay more than 30% of the item’s value for that delivery – most no more than 20%.
  3. Electronics given as gifts will likely be the most ordered items.
  4. Consumers consider medicine and batteries important and urgent enough for drone delivery.

Here’s a simple example based on the data gathered: A consumer camera is ordered as a last minute gift and needs to be delivered in 30 minutes or less. The best enthusiast compact camera in 2014 is the Sony DSC-RX100M II Cyber-Shot Digital Still Camera. Its shipping weight is 3 pounds. At the date of this post, it lists on Amazon for about US $650. If the drone delivery service charges 20%, then the extra cost will be US $130.  If the drone delivery service charges 30%, then the extra cost would be US $195.  Keep in mind this is an example only.  We do not know how much Amazon Prime Air will charge for this or any other items – nor do we know what items actually qualify for the service.  Regular Amazon Prime users know already that not all items qualify for its two-day delivery service since they ship from contracted suppliers.  However, for comparative purposes today, if you were to order this item for U.S. overnight delivery to the West Coast, the charge would be approximately $34.

I believe drone delivery is best suited to high value, lightweight merchandise, including some items at Walgreens, CVS, or Rite-Aid, and a meaningful portion of the merchandise at many other large retailers. In addition to consumer products delivered to households, drones can provide fast and cost-effective deliveries to remote, hazardous, or hard-to reach areas.  Other applications for drone delivery include:

  • Relief shipments or medicines needed on-site quickly
  • Autonomous logistics within corporate structures or facilities (micro logistics)
  • Transportation network or logistics for last-mile delivery of critical components or raw material
  • Document delivery

As always, feel free to comment or ask questions or email me directly at colin@droneanalyst.com.

Image credit: Shutterstock

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11 Comments

  1. Colin Snow October 3, 2014 at 8:24 AM

    As a follow up I looked at another camera example. The current Amazon best seller is the Nikon COOLPIX L830. It lists for US $197. Package weight is 1.1 lbs. A 20% delivery charge would be $39 and 30% would be $59. If ordered from a NY camera house the next day delivery charges from NY to CA would be the same as the Sony camera – $34. If drone delivery comes at a premium, then it seems to me the charge would be more than 30% of this item.

  2. Salvatore Manitta October 3, 2014 at 8:24 AM

    Great artical.
    Drone pad development proceeding.
    Empire Unmanned Aircraft Systems Receiving.

  3. Tom Ethen October 4, 2014 at 8:18 AM

    Great research. This is like the early days of the automobile (or at leas that is what I have been told). I guess the DHL experience in Germany is an indicator of the problem: weather. We still have hurdles to overcome, not the least of which is the regulatory climate. Thanks for the work on the article.

    • Colin Snow October 4, 2014 at 1:16 PM

      Thanks Tom for reading it and commenting. Yes. Weather matters. I wonder how many upset customers there will be when their 30 minute delivery is delayed a day or two.

  4. Fintan Corrigan October 22, 2014 at 12:21 PM

    Great article. I can see a huge benefit for drones to be used in delivery and in other areas such as health and rescue, farming and travel videos. The quality of these drone technology is improving very fast. I believe the Linux Foundation is also becoming involved with development of software solutions which should move the technology even faster.

    • Colin Snow October 23, 2014 at 3:17 PM

      Thanks. Yes, its moving fast and I think you are right. The work that the Dronecode Foundation https://www.dronecode.org/ will oversee should make innovations accelerate.

  5. Mark Williams February 18, 2015 at 12:56 PM

    One thing that wasn’t discussed is Amazon makes no profit (currently) on delivery. (The shipping companies make all the transport and delivery revenue) So Amazon stands to gain enormously, by cutting out the middle man in shipping, even if it accounts for only 25%-33% of what it sells.. This is why Drone delivery is of so much interest to Amazon, Google and other’s. They don’t need to purchase a huge number of delivery trucks or hire armies of delivery people.. They stand to make a fortune on delivery services using drones. .

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  7. Bret R June 12, 2015 at 11:05 AM

    As our demand for reduced communication response time increases (instant connection via mobile devices, etc.) it’s only expected that instant on-demand delivery of goods would be next on the list for consumer demands. Drone delivery will revolutionize the online market to go from click, to buy, to receive, to use all within 30 minutes of purchasing your product.

    • Colin Snow June 12, 2015 at 11:40 AM

      True about the demand, but not the revolution. Drone delivery is legally considered commercial operations of an aircraft and right now regulatory bodies like the FAA have rules in place that restrict it.

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