Drone-as-a-Service for last-mile delivery: Evidence of economic viability

Abstract

An economic viability of last-mile delivery via drones is assessed, offering an investment model comparing traditional motorcycle delivery to drone-based alternatives. Two drone investment options — purchase or lease (Drone-as-a-Service) — were introduced. The proposed last-mile delivery model considers capital and operational costs, calculating Net Present Value(NPV) and Return of Investment (ROI) per investment scenario. For the operational expenses, the energy consumption model for the motorcycle and the drone is formulated. Furthermore, three wind settings — low, medium, and high wind — were examined to account for environmental factors impacting drone performance. The investment model has been formulated and then validated considering the relevant literature as well as realistic information collected during a semi-structured interview with industry experts The findings affirm the financial feasibility of adopting drones for last-mile delivery. Drone-as-a-Service emerged as a more profitable choice, exhibiting improved NPV and ROI over owned drones or motorcycle delivery. Emphasizing DaaS in the investment model presents a probable scenario for the logistics industry, easing their transition to drone technology. Evidence of DaaS viability is of value since it could convince risk-averse distribution vendors to adopt drone delivery.