Launching a Drone Delivery Business
Drone delivery has come a long way since Amazon’s Jeff Bezos opened the world’s mind to rapid home delivery of retail goods. The last few years have seen some major advances in large-scale last-mile drone delivery with retail leaders like Walmart and Amazon, logistics leaders like UPS and FedEx, and technology leaders like DroneUp and Wing expanding their residential drone delivery trials throughout the US.
While the residential drone delivery projects are most often the use case that captivates the general public, there are a litany of commercial use cases that have proliferated in the last few years as well. Many of these commercial applications are able to operate under today’s existing FAA flight regulations. Given the market opportunities in the drone delivery sector, the space has become a must-watch growth sector for entrepreneurial drone operators, drone service providers, and enterprise-level logistics providers looking to expand to new nodes of transportation.
If you are a soon-to-be drone pilot, drone service provider, or responsible for your company’s corporate growth strategy, then we have some suggestions on what you’ll need to consider if you are looking to expand into the exciting world of last-mile drone delivery
Table of Contents
Understand the Value Proposition of Your Drone Delivery Service
Drone delivery has become a common part of the consumer consciousness, but understanding the specific advantages last-mile UAV delivery brings to your prospective customers is necessary to help you build a business that will be successful. Fully comprehending the advantages of drone delivery over existing delivery paradigms will also help you as you navigate the rest of the process to establish, market and grow your business.
Drone delivery can be disruptive to many aspects of your target customers’ business objectives, including:
Overhead Cost Savings – Traditional last-mile deliveries conducted with delivery vans and cars staffed by trained drivers, requiring carbon-emitting fuels, are nearly ubiquitous in every community in the country. While replacing these terrestrial transportation modes with last-mile drones does not make financial sense in every situation, as the costs to conduct last-mile drone deliveries continue to fall, there will be a tipping point in the near future. Until then, there are other massive advantages drones offer over standard land transportation.
Manpower Savings – Traditional terrestrial delivery is extremely labor intensive, requiring drivers, pickers, loaders, dispatchers, etc. Logistics-streamlining automation is already seeing massive improvement, just look at the automated warehouses that Amazon operates around the country. As drone delivery proliferates, UAVs will continue to offset some of the manned delivery vans that dot our roadways. Outside logistics operations, delivery drones are already minimizing labor-intense missions, like collecting water samples via drone rather than dispatching staff to physically collect tubes of water.
Faster Last-Mile Delivery – Delivery drones are able to speed deliveries from a logistics center to their destination. For time-sensitive deliveries, like transporting blood samples to a testing lab, or mission-critical deliveries like getting spare parts and tools to an offshore wind turbine , speed is of the essence and sometimes the road is not available.
Reduced Greenhouse Gas Emissions – Transitioning to electric-powered commercial delivery drones can help reduce the emissions that contribute to climate change. For years, logistics operators and fleet managers have sought to transition to liquid natural gas, or electric-powered vehicles. Obviously, LNG vehicles are an improvement on standard diesel and gasoline-burning alternatives, but even compared to the energy needed to power large electric fleets, UAVs can help reduce the electric consumption for your potential customers.
Competitive Marketing Advantages – While the rate of drone delivery proliferation is accelerating, for many industry sectors using a drone for last-mile delivery is still a relatively novel approach. For businesses embracing drone delivery, their rollout of airborne deliveries can present a marketing opportunity that helps them stand out from their competition. For local or regional food service entities, offering customers a unique experience can drive excitement within their fan base. Additionally, many enterprise-level businesses have adopted carbon reduction goals for which the deployment of drone delivery could help them take a step towards fulfilling.
Opening New Territories – In remote or isolated areas, where vehicle transportation can take a long time to reach communities, or are simply only accessible by boat, local businesses offering regional drone deliveries can open entire new markets to their services. Established delivery routes to these communities can also benefit local government, emergency services, etc. seeking more timely access to those residents.
Saving Lives – The speed with which a drone can reach victims of a medical emergency can enable first responders, search and rescue teams, etc. to affect potentially life-saving action in a fraction of the time of overland vehicles. Commercial delivery UAVs are already in use around the world to assist in search and rescue missions, speed the arrival of life-saving defibrillators, and transport blood transfusion doses.
Considering these advantages which are fairly unique to last-mile drone delivery will help you better understand the market opportunities in your targeted area of operation. This understanding will also enable you to create a business model that caters to the needs of your target communities, and build a drone delivery business that can not only succeed but be prepared to scale as market adoption increases.
Creating Value for Your Drone Delivery Customers
It goes without saying that to build a successful drone delivery business, your offering will need to deliver a value-add for your customers. Because most customers will first evaluate the cost of drone delivery, it's valuable to understand their existing delivery cost model. For example, a local restaurant may staff a delivery driver of their own, and/or rely on food delivery services like DoorDash or UberEats. Alternatively, an enterprise-level business like a hospital network may ferry blood samples to the testing labs. Understanding your target customer’s business model will enable you to better position your service offering by creating value for them. When devising this value proposition, you can ask yourself:
Is drone delivery going to save your customer money? – For customer use cases where drone delivery will realize savings in manpower, equipment investment, recurring costs like fuel or ongoing maintenance, etc. the value proposition is a pretty straight forward financial cost-benefit analysis. In these situations, you will likely look to concentrate your financial projections on establishing a return-on-investment (ROI) timeline so the customer can see where the break-even point will be, and how adoption of drone delivery will project to its profit margins.
Is drone delivery going to cost more money? – Just because drone delivery might cost a customer slightly more than traditional delivery methods doesn’t mean drone delivery can’t offer other advantages to the customer and their end clients. Consumers have proven willing to pay extra for the novelty, speed and convenience of drone-delivery goods. Also, your customer may be willing to modify their profit margins to offer a faster, greener, no-contact delivery practice.
Does drone delivery offer a path to new revenue? – While the cost of your drone delivery service will always be a primary consideration for potential clients, in use cases where drone delivery is able to open new markets for a customer, the cost can be integrated into their evolving business plans. These types of use cases are often the most exciting, operating on the cutting edge of delivery drone capabilities to solve more complex challenges for customers.
Working Within Current Regulatory Allowances for Drone Delivery
Before investing in a drone delivery business or starting to recruit potential customers, it is imperative to develop a true understanding of national and local flight regulations for your area of operation. We won’t delve into the intricacies of these regulations here, but for the sake of understanding your market opportunity, it is important to understand some of the levels of regulatory allowances that are available.
As a starting point, you will need to acquire a Part 107 remote pilots license mandated by the Federal Aviation Administration (FAA). Flying under a Part 107 license, pilots are required to maintain visual-line-of-sight with their drone at all times. Operations must also avoid flying over people and roadways with vehicles underway. While a litany of customer use cases can be undertaken within the confines of the Part 107 regulations, expanding your drone deliveries business beyond-visual-line-of-sight (BVLOS), and operating over people and moving vehicles, will necessitate a separate Part 135 certificate issued by the FAA.
Pursuing this elevated certification will require some planning, submission of safe flight data, and take some time. Luckily, some of the early adopters of commercial drone delivery have already blazed the regulatory path to secure Part 135 certifications, and the process is continuing to be refined and streamlined which should help speed future applications.
What Applications Are Currently Possible for Drone Delivery
Depending on the level of regulatory permissions you are prepared to secure, the use cases for your delivery drones will vary. Assuming you are looking to get the business off the ground immediately, then pursuing the longer-term certifications for Part 135-governed operations will be a future goal for the business. In the immediate, though, there are several use cases that can be conducted under your initial Part 107 license, some of which include:
Flight Paths Over Water – Delivery routes that travel over water ways, lakes, or the ocean can often be enacted under Part 107 requirements. With minimal visual obstructions over the water, you are able to maintain the direct line-of-sight to the drone platform for several kilometers as well. These operations can also be extended with the insertion of visual observers along the route who are in communication with the pilot to ensure regulatory compliance.
Confined to Private Property – Operating a drone logistics service over large-scale closed sites is also readily attainable under existing Part 107 requirements. Restricting drone flights to such private properties allows all workers or visitors to be properly notified of drone operations in the area. Instances where these closed-site operations can find valuable use cases could include delivering food and beverages throughout a country club, or transporting small tools, spare parts or samples through a mining operation.
Remote Area Operations – Connecting remote communities to goods and services is another ideal application for commercial delivery drones. In areas where communities are less dense, traditional terrestrial delivery models tend to lose their economy of scale, so the direct reach of a delivery drone can make a lot of financial sense. Operating in more remote areas also makes compliance with Part 107 regulations easier.
Developing a Budget for Your Drone Business
Understanding your drone service’s value proposition, when and how you are able to operate, and identifying potential customers are all important aspects of building a business plan for a drone delivery service. The next phase is devising a budget for your planned business. Important elements of a drone delivery business budget will include:
Pilot Training and Acquisition – Even the simplest drone delivery missions will require a small team of operators. Ensuring each of those team members is a licensed drone pilot will help streamline operations. The cost of hiring trained drone pilots will vary based on location, but is often preferred to taking on the financial responsibility of training an entire team new to flight operations.
Equipment Acquisition – Investing in the right delivery drones will impact the customer use cases which you can take on (more on this shortly), but the drone hardware is only one aspect of the equipment you will need to acquire. Drone delivery operations also require appropriate communications gear, weather monitoring equipment, power units to recharge batteries often off the grid, packaging materials for your payloads, safety equipment such as hardhats, high-visibility vests, a way to cordon off your launch area, etc.
Routine Maintenance – Any aeronautical undertaking will require routine planned maintenance of all airframes and associate equipment to maintain airworthiness. This portion of the budget should also take into account anticipated need for spare batteries, spare parts, etc.
Legal Support – From basic business establishing paperwork, to contracts for customers, liability analysis and documents, etc. all will necessitate a specialty legal support element that needs to be anticipated in your budgeting.
Business Insurance – While drone delivery operations have proven to be extremely safe, the potential for damage to people, property and your equipment certainly exists. Comprehensive insurance coverage for your drone delivery business is a must.
Marketing and Sales Strategies – All-to-often overlooked, aggressively marketing your drone delivery services is imperative. Whether you are starting a new drone delivery business or expanding from existing drone services, a well-researched marketing plan will be a necessity to build a customer base and start to realize your return investment. It can be easy to skimp on your marketing budget with all the other investments needed to launch any new business, but a business without customers can never be successful.
Build Your Drone Delivery Fleet
As mentioned earlier, building your delivery drone fleet to meet the requirements of your customer use cases is another important element of your business launch. Make sure to work with established drone manufacturers, and select airframes that offer capabilities that meet both the immediate needs of your service offering with the ability to grow alongside your service offerings. When evaluating commercial delivery drones available on the market today, some of the core considerations should include:
Payload Capacity Needs – What are the specifications of the payloads you will be delivering. Are they mainly retail bags or shipping boxes? Are they larger payloads like specialty cargo boxes for medical deliveries? Regardless, make sure the drone platforms you select can lift the payloads you will need to deliver.
Range Requirements – How far will your deliveries reach? Make sure the platforms you select are capable of conducting your planned missions. Don’t forget the established range for a commercial delivery drone needs to encompass your entire round-trip route. The overall reach of your delivery drone will also be affected by the weight of the payload.
Delivery from Altitude – Commercial delivery drones tend to support one of three main delivery paradigms. They either drop payloads with a simple servo release, drop payloads under a parachute, or deploy payloads on a drone winch. While all three methods will get a payload to the ground, winch deliveries are more accurate and less jarring for the contents of your deliveries. Delivering from altitude also ensures spinning rotors are kept high above potential obstructions like trees and wires, and away from people and property on the ground.
Be Able to Retrieve Payloads from the Field Too – Choosing a drone platform with an integrated drone winch also offers you the capability of retrieving payloads from the field. For a new drone delivery business, such capability can be a deciding factor for potential customers, and well worth investigating.
Growing Your Drone Business Beyond Delivery Missions
Most commercial drone platforms offering the specifications necessary to conduct delivery missions, such as long-range and heavy-lift capabilities, are also inherently well suited to missions beyond transporting goods. When selecting the UAVs that will comprise your delivery fleet it can also be invaluable to ensure that they are ready to accommodate additional use cases. Being able to diversify the payloads mounted to your drones will also enable you to diversify your service offerings, putting your business on a better track to scale.
A robust delivery drone can usually be outfitted with additional hardware to enable you to offer an array of additional services. Some of the popular use cases for delivery drones beyond transporting payloads includes:
Aerial Inspection – Swapping your drone delivery winch for a high-quality camera opens the world of aerial inspections. Leveraging drone platforms for inspections is becoming quite common to reach areas that may be less-accessible to human inspectors, conduct inspections faster than a team of engineers, and as a way to shield inspectors from adverse safety risks.
Mapping and Surveying – With their onboard GPS capabilities, delivery drones can also step into the role of aerial mapping or surveying. Mapping drones can speed GIS data collection with onboard high-resolution RGB cameras or advanced LIDAR sensors for 3D mapping. Acquiring the appropriate software tools to your drone business to crunch all of this mapping data will also help you offer a more holistic service.
Aerial Patrol – UAVs are uniquely adept at assisting in security patrols with the ability to conduct non-stop overwatch for a single site or follow pre-planned patrol routes. Customizing your delivery drone loadout for patrol should include integrating infrared cameras to allow for nighttime service. Additionally, features like onboard light systems and an onboard megaphone can work alongside your delivery winch to enable customers to engage with people or the environment while on patrol.
Water Sampling – The speed and ever-increasing range of commercial delivery drones also makes them ideally suited to assisting in water sample collection. Leveraging drones for what has traditionally been done with teams of staff can minimize labor demands for a client, help keep their team from unsafe conditions in the field, and speed the sample collection process. Leveraging your delivery drone’s integrated drone winch to lower a water data sensor can collect key information in near real time, or alternatively, water collection bottles can easily be transported to target collection locations to retrieve physical water samples.
Get Help Launching Your Drone Delivery Business
Launching a new drone delivery business, or adding drone delivery capabilities to your enterprise operations, can be a game changing opportunity. Establishing a well-thought business plan, acquiring the appropriate hardware, and staffing the right team all will position your new enterprise for success.
Here at A2Z Drone Delivery, we specialize in developing purpose-built drone delivery solutions that help our customers solve some of the most complex challenges facing drone logistics. Our specialized team of engineers, developers and pilots can help you launch your drone delivery business.
If you are considering starting a new drone delivery business, expanding your drone services or increasing your fleet capabilities to include logistics support, or looking to bring delivery drones to bear on your enterprise-level business operations, we encourage you to reach out to our team today.