Strategic Business Plan for hyperlocal short-range drone delivery service

Assignment Taken

Business Plan

Case Understanding

The case involves a well-known courier company. Our Airway delivery company is interested in launching a new hyperlocal drone delivery service, focusing on short-range drone-based services. Since the firm has completed all of the trials and testing. We don't have to worry about the licensing and approval process. We can assume that we are ready to start our business. For the same reason, we must develop a business plan, and in order to do so, we must first understand the potential issues that may arise along the way. The following are some of the issues and key areas where we need to focus on to run a successful business: 1. What would be the best location to start this business? 2. What would be our target B2B Customers? 3. We need to create an end-to-end drone management system that takes into account all of the limits, such as the number of drones, the distance that drones can go, the weight that drones can carry, and so on. 4. Given the above constraints, we may need to consider limiting the radius of operations for the initial launch. 5. We must determine what is the best value proportion for our customers, as well as for their end customers. 6. Consider innovating the process from the point where a customer requests a drone to the point where the parcel is delivered to the end customer. 7. Throughout the drone journey, we must consider all risk factors. Some features that drones should have in order to function efficiently must be assumed. 8. Make a list of the infrastructure that will be required at each location (Pick up points, intermediate points and drop points). The strategic locations for drone charging and maintenance. Additionally, Below are the business strategies that will be discussed with the various department heads in order to establish the brand. 1. Finance Head: a. How many deliveries do we need to recover the fixed cost if we have a one-year break-even point? b. What is the average cost of delivery? c. What is the maximum range of a drone that can be operated? d. How can we keep track of and report on the monthly financial situation? 2. IT Head: a. How to build the capability to track the business as well as the drone services? b. What should be the strategic ways of reducing risk related to drones using advance technology and data analytics? c. What should be the strategic locations for drop off points in specific areas? 3. Marketing Head: a. What should be the go-to-market enablement? b. What are the various Business Channels that should be targeted? c. How to increase the brand visibility? 4. HR Head: a. What kind of effective workforce and organisational structure are needed for a firm to run smoothly? b. How can those employees be trained to be more productive? c. What would be the proper pay scale for each staff level? With all these understanding mention above, we will be able to come up with one-stop hyperlocal short-range drone delivery service.

BCS Solution Summary

The one-stop solution for launching a local drone delivery service by addressing our customers' needs and evaluating all of the key areas specified in the case understanding to come up with a successful business. Below is the summary of our drone delivery solution: 1. Location of the business: Whitefield, Bangalore - Known for its tech parks and upmarket apartment complexes, lively Whitefield is also a shopping and entertainment hub with large amount of e-commerce deliveries and huge traffic scenarios. 2. Target B2B Businesses: a. E-commerce food delivery aggregators: End customers from IT tech hub majorly and nearby complex apartments. b. E-Pharmacy marketplace: Urgent needs of medicines and medical care in the urban as well as nearby rural areas. c. Local grocery businesses 3. With all the constraints into consideration, we have calculate the average number of deliveries for break even is 124 and average delivery prie per order is 85. 4. Maximum Operability Range: 3 km radius with Whitefield area in the centre. 5. Value Proposition: improving customer satisfaction, decreased delivery time, efficient last mile delivery, urgent need fulfilment, reduced contribution of road traffic and alternative business opportunity. 6. End-to-end business process flow is explained in below case solution. 7. Assumption of drone capabilities: The drone should have a 360-degree camera, a sense and avoid technology to avoid obstacles during the travel, scanners attached that can scan the content of the package, able to verify the OTP from the end customer and the business, GPS for real time tracking. Business needs fulfilment from all departments: 1. Finance Head: a. Average Price Per order: Rs 85/- per order b. Number of deliveries for per day: As the short-range drones can travel up to 150 KMs per day. On average round trip delivery distance is around 5 – 6 Kms. c. Emergency Fund (1.2 Cr) in hand 2. IT Head: a. Interactive Dashboard to monitor and track business real time. b. Strategic pick up & drop off location points in the nearby areas of Whitefield, Bangalore. c. Drone data analytics regarding no. of drones in transit, no. of orders delivered, rating history of each order, rules violation and future demand forecast. 3. Marketing Head: a. Go to market Enablement and Business channels: Outbound marketing and social media digital footprints b. 70% cost utilization for Outbound marketing and 30% c. Establish MarTECH stack for optimal lead generation. 4. HR Head: a. Total employee count: 15 b. 3 level hierarchical organization structure c. Total HR cost: 1.1 crore (for Qualifies Drone Operators, Building Management Team, Software development Team and Support Staff) The above elaborative summary gives a good view and understanding of the entire drone-based delivery business.

Solution

Examining case solution using a specific business scenario. Here, Zomato is our aggregator partner using our drone services to deliver food at Whitefield Bangalore IT tech park.

Steps involved in entire business flow:

1. Zomato end customer from Whitefield IT park searching for drone-based delivery. Checks happening in the back end includes:
   1. Availability of nearby 5 drones
   2. Do Food partners have pick up point setup
   3. Do we have nearby drop points and customers agree to pick it up
2. Once all the checks fulfil, the customer order will include drone delivery cost based on the weight of the food order and time estimation will be calculated.
3. Drone will arrive at the food partner pick up point once order is ready to pick.
4. Once it is picked, the monitoring and tracking of order will be available for end customer.
5. In transit, all the drone details will be captured including weather condition, collision detection and order information.
6. Before arriving at the destination, the end customer will be informed about the exact time and nearby pick up spot.
7. Once drone and end customer are reached to the pickup point. We will verify the connection using camera and pre-send OTP system.

 

Industry Overview:

From 2023 to 2030, the global drone package delivery market is expected to grow at a CAGR of 44.7 percent, from USD 2.1 billion in 2023 to USD 27.4 billion in 2030. The rising demand for speedier delivery and favourable regulatory developments are two important drivers that are predicted to propel market expansion in the next years. In the Asia-Pacific area, the most popular uses for drone package delivery are retail and e-commerce, followed by healthcare and pharmacy. According to a survey performed by UnearthInsight, the market for end-use drones in India is expected to reach USD 1 billion in the near future.

Because of the growing desire for faster and more immediate delivery throughout the world, the worldwide drone package delivery industry is likely to increase significantly. Increased usage of low-cost and light-payload drones for product delivery, inclusion of advanced sense and avoid systems in aerial delivery drones, and growing desire for decreasing carbon emissions are all important factors influencing market expansion. As a result, getting into the drone-based delivery company has a bright future ahead of it, and it appears to be a wise move to utilise drones to distribute and dispatch items.

 

Our Mission and Vision Statement:

• Our goal is to become the most well-known brand in the commercial drone delivery services industry.
• Our mission is to use drones to deliver packages faster and more reliably. We intend to create a commercial drone delivery services firm that can compete effectively with other top brands in the commercial drone delivery services sector in the United States and throughout the world.

 

Challenges for drone delivery companies:

• Legislative and regulatory issues: To keep an eye on things like height (drones aren't allowed to fly higher than 400 feet), range of operation, drone weight, privacy rules, and navigable airspace.
• Talent available for scaled operations: The drone delivery industry has a scarcity of trained and experienced personnel.
• Infrastructure: Drones have substantial initial deployment and set-up expenses. Drone launch pads, synchronising drone movement with buildings and open operational areas, licencing, battery charging facilities, software and technology, training facilities, and R&D all demand significant expenditure.
• Many people are still hesitant to accept drone delivery owing to worries about privacy, safety, and security.
• Weather impact: Drone delivery operations are hampered by adverse weather conditions such as rain, wind, and snow.
• Drone abuse: There's a danger that shipments will be stolen and that drone equipment will be damaged.

 

Competition:

• When it comes to courier and delivery, there are several rivals in various categories. Our USP, though, will be air delivery by drones, which will be the fastest of all.
• Dunzo, a direct rival, offers a similar idea to ours, but uses a traditional distribution method. Dunzo now has a market value of 15 crores in Bangalore.
• Swiggy and Zomato are rivals in the food delivery area, whereas MedLife, 1 mg, Phameasy, and others are competitors in the pharmacy delivery space.
• Bengaluru has a large food delivery market, with over 5 lakh deliveries each day. So while this is a potentially massive industry, penetration and client acquisition will be difficult owing to large rivals like as Swiggy and Zomato, who may easily enter the drone delivery business.

 

Products and Services

• Courier Services (PAN India) - Traditional
• Drone-based Delivery Services (Hyper Local Short Range Delivery Space) – Whitefield Bangalore (initially 3 km radius)

 

Major Objectives of Drone-based Delivery Business

• To achieve Break-Even within first year of operations
• To establish strong Brand Equity
• To become a market leader through introducing innovation in processes and products

 

Future directions of growth

We expect to strategically expand in 4 different stages over the course of next few years and beyond.

Stage 0: Involves development of core competencies- establishing an efficient supply chain and logistics system to strengthen the service with existing onboarded partners.

Stage 1: Product Line Expansion- addition of drones, partners and other essential accessories as per  extensive primary and secondary research

Stage 2: Market Expansion – Expanding in nearby areas of Bangalore and also expanding similar model in other metro cities.

Stage 3: Geographic Expansion- expanding in nearby area and slowly entering the Tier 2 cities as well – keeping a target like expanding operations across 3 Tier 1 cities and 1 Tier 2 city every year.

Additionally,

• Shift from "Short Range Drone Based Services" to "Long Range Drone Based Services"
• Gradually shift from hyper-local businesses located in Bangalore and toward establishing operations in other parts of the country.
• Customizing the product based on the demographics of the people in each region
• Collaboration with e-commerce and digitally native businesses to expand business possibilities
• As drone-based delivery services are particularly ecologically sensitive, creating brand positioning based on the topic of 'Sustainability' is a good idea.
• Including 'Premium' and 'Non-Premium' versions of services in the future to appeal to various client categories

Conclusion

After implementing all of the proposed recommendation strategies and focus areas into action, the company will be able to create a one-of-a-kind one-stop business solution for hyperlocal short-range drone delivery. With all of the constraints in mind, our solution would be able to break even in a year, establish brand value, and develop product business flow through innovative processes. Long-term expansion is expected to pursue a multi-pronged approach that includes product line expansion, market expansion, geographic expansion, and backward integration in order to gain a larger and stronger market foothold.

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