Last Mile Drone Delivery Market

Last Mile Drone Delivery Market Outlook (2023-2033)

The global last mile drone delivery market is expected to secure a valuation of US$ 309.74 million in 2023. During the forecast period of 2023-2033, demand for last mile drone delivery is expected to increase at a CAGR of 25.4% and reach a market size of US$ 2,978.3 million by the end of 2033.

Last mile drone delivery services are about 85% of the total drone delivery market which worth around US$ 290 million in 2022.

Report Attributes	Details
Market Size (2022A)	US$ 247.0 Million
Estimated Market Value (2023E)	US$ 309.7 Million
Forecasted Market Value (2033F)	US$ 2,978.3 Million
Global Market Growth Rate (2023-2033)	~25.4% CAGR
North America Market Share (2022)	~43.0%
East Asia Market Growth Rate (2023-2033)	~26.4% CAGR
United States Market Growth Rate (2023-2033)	~25.8% CAGR
Key Companies Profiled	Aergility Aerialoop Aerit Antwork Aviant Dove Air Droneup F-Drones Flying Basket Flytrex Jedsy Manna Matternet Mission Go Rakuten Drone SkyDrop Speed Bird Spright Volansi Zipline

Growing demand for quick delivery of packages

The major factor attributing to the growth of the last mile drone delivery market is people’s demand for quick delivery of packages or couriers. Quick or instant delivery of packages is the key strategy of e-commerce companies to enhance consumer experience and satisfaction levels. Also, consumers prefer same-day delivery of the product that they have ordered as soon as possible. About 80% of shoppers prefer to have same-day delivery.

Due to this reason, same-day delivery becomes popular among people. Drones are founded as a key innovation in the process of delivering products on the same day. Specifically, in last-mile delivery of the package, drones play an essential role in delivering the order quickly compared to traditional delivery methods. Drones avoid traffic jams, adverse road infrastructures, and vehicle collisions to prevent delivery delays.

• Short Term (2023 Q1-2026): The market growth is benefited from favorable initiatives by market players and government approval regarding the utility of drones in last-mile delivery services. Post-COVID, the demand for these services is increasing in food, healthcare, and others.
• Medium Term (2026-2029): In the mid-term, the market is expected to gain momentum with increasing e-commerce industries. Whereas, retailers are expected to exhibit a leading share in demand for last mile drone delivery services.
• Long Term (2029-2033): In the long run, the healthcare sector will be a leading cause for the expansion of these services. Also, investment by both large and small market players in the development of drones that can provide last-mile delivery services will foster market growth.

East Asia and Europe is projected to rise with highest CAGR of 26.4% and 25.9% during the forecast period.

Image represents market bifurcation according to region and end-use industry. Commercial customers holds leading share of 74.0% in the global last mile drone delivery market.

What are the factors driving the demand for last mile drone delivery market?

“Procurement of cost-efficiency with drone utility”

Last-mile delivery is observed to be the most expensive process in the entire supply chain. Last-mile delivery with the help of electric vehicles, vans, or cars results in the attainment of excessive costs on fuel, energy, repair & maintenance of vehicles, and others. Other factors that have also been impacting the costlier last-mile delivery is poor route planning by drivers, adverse road condition, failed deliveries, and others. Owing to these factors, drones are been utilized by both retail and commercial consumers to reduce the excessive cost incurred on these processes. Last mile drone delivery services are the most prominent option in the current scenario to prevent the expensive delivery process. Drones in last-mile delivery services, avoid fuel costs, delivery mistakes, and poor routine planning by drivers. Therefore, the demand for last mile drone delivery services is gaining popularity from end-users worldwide.

“Increasing popularity from e-commerce enterprises”

Globally, people’s preference for online shopping has grown drastically. Online shoppers demanding same-day or instant delivery have stimulated the adoption of last mile drone delivery services. Through last mile drone delivery services, e-commerce companies are making quick or instant delivery possible for the customer with maintaining safety and accuracy simultaneously.

The increase in intense competition among e-commerce enterprises has also fuelled the demand for last mile drone delivery services. E-commerce companies are opting for these services to make quick & instant delivery without failing to escalate the customer experience and satisfaction level from quick or instant deliveries.

With the benefits offered by last-mile delivery services like time & cost efficiency, safety is one of the major factors that paved the way towards this service adoption. As last mile deliveries with the vehicle are more prone to package loss, goods damage, and others. Whereas drones offer last-mile delivery services with high safety, and accuracy by avoiding all the limitations that may occur in vehicle deliveries.

What are the factors challenging the market growth?

“Privacy concerns associated with drone delivery services”

The drone is featured with many technologies and tools like cameras, artificial intelligence, sensors, GPS, and others. Drones are required to have the location detail of the customer and occupy all the necessary details of the customer while delivering a package. Drones communicate with their base using unencrypted communication channels, which are expected to be prone to exploitation by cybercriminals. Cybercriminals can impede and could access sensitive data from a drone that it exchanges with a base like a video, picture, and flight paths.

Additionally, camera-integrated drones are expected to capture images of videos of people & properties which is unrelated to the transaction. People may raise objection to get caught on camera without consent which is a concerning factor, limiting the utility of delivery drones. With such concerns regarding privacy and security, the drone's utility for last-mile delivery services is expected to be hampered.

Country-wise Insights

Why Does the U.S. Command a Large Share of the Global Market?

The United States is observed to have a leading share in the utility of drones. The increasing popularity of online food delivery services and demand for quick package delivery services is a major factor attributing to the escalating of the last mile drone delivery services in the region. In March 2022, Flytrex, a leading drone delivery services company introduced an automated drone delivery service for food delivery in Texas, United States.

With the excessive utility of private vehicles in the region has impacted traffic congestion in the region. In such matter concern, last mile drone delivery services are adopted by companies to avoid traffic congestion and offer quick or instant delivery services to the customer.

Also, government authority like FAA has made necessary amendments regarding the utility of drones in delivery services by making it easier to utilize the drones following certain regulations and ease in certification occupation for the same. This has become a major factor that will likely create a lucrative opportunity for the market to expand in the forecast period.

How Can China Be a Highly Lucrative Market for last mile drone delivery services?

China is expected to rise with a CAGR of 27.2% during the forecast period (2023-2033)

The e-commerce industry in China is escalating the demand for last-mile drone services. Since, last mile deliveries of packages are very costlier to the e-commerce industry, which exhibits the demand for solutions like drones to offer cost-efficient delivery of packages to the customer and enhance the profitability of e-commerce companies. By addressing this issue, the government has also promoted the utility of drones for last-mile delivery services to offer distant rural deliveries to deal with high urban demand pressure. Owing to these factors, the demand for last-mile delivery services is projected to rise at a significant rate in the country.

Additionally, the market is projected to expand tremendously in the country with the utility of last mile drone delivery service post-pandemic. Food & beverage and healthcare companies are taking favourable initiatives to deliver parcel safety to the customer by maintaining social distancing and providing a product with contactless delivery. Due to this factor, the market is projected to expand at a significant pace during the forecast period.

Category-wise Insights

Retail sector to exhibit leading share in the utility of last mile drone delivery services

Last mile drone delivery services have gained substantial demand from the retail sector. Retailers are benefited from quick, cost-effective, and accurate delivery of packages to the customer with the help of drones. Traffic congestion, fuel expenses, and environmental issues are efficiently resolved with the utility of drones by retailers.

Food, medications, baby products, and consumer electronics are some major products being delivered with drones. Retailers use last mile drone delivery services to meet consumer demand regarding instant delivery of these products. With the increasing retail sector worldwide, the market is projected to have substantial demand in the forthcoming period.

Commercial customer type to hold leading share

Commercial customers include e-commerce enterprises and food delivery channels which manifest the utility of drones for last-mile delivery services. These enterprises are growing worldwide with an incremental shift of product purchases from offline to online mode of the channel, increasing the utility of smartphones and surging internet penetration. To cut down the excessive cost incurred in last-mile deliveries and enhance profitability, commercial customers are rigorously opting for these services.

Governments across the globe framed strict norms on reducing carbon emissions has paved the way for the utility of drones for last-mile deliveries rather than vehicles. Many companies like Walmart & Amazon have tested drones for last-mile deliveries and are projected to execute these deliveries in the coming future with government certification & approval. Owing to these reasons, the segment is expected to hold the leading share in the customer type segment and is projected to expand with a substantial growth rate in the future.

Competitive Landscape

Key market players in last mile drone delivery market are Aergility, Aerialoop, Aerit, Antwork, Aviant, Dove Air, Droneup, F-Drones, Flying Basket, Flytrex, Jedsy, Manna, Matternet, Mission Go, Rakuten Drone, SkyDrop, Speed Bird, Spright, Volansi and Zipline.

The business environment for last mile drone delivery services is highly competitive. With continuous moves like acquisition and service launch by market players, the last mile drone delivery services market is expected to be highly fragmented and projected to rise at a significant pace in the forthcoming period. For instance,

• In September 2022, Valqari acquired the IDU group to establish drone infrastructure for last-mile deliveries. The acquisition is aimed to enhance customer experience and companies' footprint worldwide.
• In June 2022, Amazon introduced Amazon Prime Air drone delivery services in California, United States. Packages upto 5 pounds or less are preferred to deliver with these drones.

Fact.MR has provided detailed information about the provider of last mile drone delivery market positioned across regions, revenue growth, and service offering expansion, in the recently published report.

Segmentation of the Last Mile Drone Delivery Market

• By Capacity:

  • Upto 5 lbs
  • 6-10 lbs
  • Above 10 lbs

• By Customer Type:

  • Retail
  • Commercial

• By End-use Industry:

  • Healthcare
  • Retail
  • Food
  • Logistics

• By Region:

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia & Oceania
  • Middle East & Africa