Amazon introduced Amazon Prime Air with advancing drone technologies and increasing commercial usage to achieve the last mile shipping
industry disruption by delivery drones. Drones can significantly accelerate delivery times and reduce the human cost associated with the
delivery. This report examines the value chain opportunities and obstacles in the delivery drones market in Mumbai area, India’s biggest delivery
market with 20% of Amazon India’s market share. It also discusses the barriers for adoption. It concludes with our case for drones to handle
the last mile of delivery of most lightweight packages
Vedant Purohit
MARKET ANALYSIS
Savings = (Average carrier cost – Drone carrier cost) * projected
per day increase in delivery * Number of deliveries per day
= (6$-0.05$)* 2* 3440
= ~40,000$
= (Number of Drones required) * Initial cost
Investment
= (Market Size * Projected Increase/Number of delivery
cost per drone)* Initial cost
Package weight distribution =(3440*2)/(12 hrs* 2 delivery per hr)*12000$
= 3,440,000$
Less than 5
= Investment cost/Savings per day
lbs Recovery
greater than 5
=~90 days
lbs
Market
Market Size = Mumbai Amazon daily orders * Drone Accessibility * Allowed Weight %
Size = Mumbai Market Share * Amazon India daily orders * Drone Accessibility * Allowed Weight%
= 0.20 * 25,000 (source:Amazon.com) * Drone Accessibility * Allowed Weight%
= 5,000 * (Mumbai Access Area percentage – Airport restriction zone percentage )* 0.86
=4,300 * (0.85-0.05)
= 3440 deliveries per day
Assumptions: Mumbai package weight fragmentation has been superimposed with US market
With current warehouse placement Amazon can access 85% parts of Mumbai for delivery under 10 mile radius
No restricted drone flying zone, except 10 sq miles near Airport
Obstacles
Mumbai Area
Maintenance Safety Subsitute Solutions
Cases of Theft and Difficult to find Substitute options like
damages might be operators, who must bike delivery and local
higher than expected hold at least a private warehouses can be
Maintenance in Mumbai area pilot's certificate and lucrative options with low
medical certification risk and high return
Safety
Substitute solutions
• Mumbai is one of the greatest market for E-commerce in India and is expected
grow 2 times with cheap internet and smartphone penetration
• Amazon can use Drone delivery references from China to tackle other obstacles
specific to population, safety and privacy in Mumbai
• If the pilot in Mumbai is successful, expanding the idea in all over India with next
half billion to enter E-commerce will be the strongest break for Amazon in the
market
Thank You!