The Harvard National Case Competition Market Opportunities for Amazon Drone Delivery Faisal Khurshid Neil Singh Neel Yalamarthy Brown University

Overview Drone constraints: 5 lb. payload 10 mile range 40 MPH average speed $24,000 per drone Human-controlled 30-minute battery life

Target Market Factors Age range Income Level

Consumer taste Urgent nature Niche market Market Size Factors Consumer taste Urgent nature Niche market

Geographic Factors Supply chain optimization Socioeconomic status Suburbs Demographics Lifestyle Delivery necessity Poor walkability

Competitive Advantages 3rd Party Delivery Services Big-box Retailers Direct Competition

Pricing Scheme Amazon Prime Customers $4.99 per delivery Builds customer loyalty A la carte service $5.99 per delivery Drives sales volume

Household & Care Products Product Line OTC Drugs Emergency Concierge Future… Household & Care Products Farm Fresh Produce

Year 1: Dallas-Fort Worth Nearby fulfillment centers Population density Wealthy suburbs Bad walk score

Year 1: Dallas-Fort Worth TOTAL AVAILABLE MARKET ELIGIBLE CUSTOMERS 4.5 MILLION 6 MILLION TARGET POPULATION 3.3 MILLION MARKET PENETRATION 1.5 MILLION PRIME CUSTOMERS ~300K Existing fulfillment centers Population density Wealthy suburbs Bad walk score

Year 1: Dallas-Fort Worth REVENUES COSTS 1.5 orders/month (Non-Prime members) $5.99/order 2 orders/month (Prime members) $4.99/order Non-prime: 1.8 million orders/month Prime: 600,000 orders/month Total: $ 28.8 million orders/year Annual Revenue (first year): $4.99 * 7.2 mill. orders = $ 35.93 million $5.99 * 21.6 mill. orders = $ 129.38 million Total Revenue = $165,312,000 Fixed Costs $ 46.5 million (Plant, Property & Equipment) $ 75 million (Drones + batteries) (CoGS) Variable Costs $ 12 million (salary) (OpEx) Total Costs (first year) $ 128 million PROFIT (first-year): $37.31 million

Year 1: Dallas-Fort Worth Drone Costs Explained PROFIT (first-year): $37.31 million 1 Drone -> 20 orders/day (2 per 80 min.) 1 drone -> 7300 orders/year Number of Orders: 28.8 million Number of drones needed: ~3946 drones Cost: 3946 * $18000 = $ 71,028,000 Cost of Drones + Battery = ~$75 million PROFIT MARGIN: 23% Break-even Analysis: 4.5 years

Increased Customer Base Growth Trajectory Battery life Increased Customer Base Range Scaling

5-Year Growth Plan Fulfillment centers Dense Population High income Seattle Chicago Philly Wash. DC Fulfillment centers Dense Population High income Geography factors Poor walk score Demographics Fulfillment centers Poor walk score Fulfillment centers Geography factors Poor walk score

5-Year Growth Plan DRIVE IMPACT BOOST REVENUE Seattle Chicago Philly Dallas- Fort Worth Seattle Chicago Philly Wash. DC 4,000 drones 12,000 drones 20,000 drones $165M revenue $400M revenue $700M revenue BOOST REVENUE DRIVE IMPACT

Unique Market Opportunity Future Synthesis of Ideas Unique Market Opportunity