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

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

3. Target Market Factors
Age range
Income Level

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

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

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

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

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

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

10. 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

11. 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 = $ million
$5.99 * 21.6 mill. orders = $ 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

12. 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

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

14. 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

15. 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

16. Unique Market Opportunity
Future
Synthesis of Ideas
Unique Market Opportunity