Assessing the Impact of Drone Technology in E-commerce Logistics

This report examines the strategic deployment of drones by Target Australia as part of their logistics operations for online shopping. It aims to evaluate the benefits realized in terms of delivery speed, cost savings, environmental impact, and customer satisfaction. Additionally, the study addresses regulatory challenges, potential risks such as privacy concerns and safety issues, and the broader implications of drone technology adoption in the e-commerce sector. The report concludes with a set of recommendations for businesses considering similar technological integrations.

Running head: USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
Use of Drone Service in faster delivery of Target Pty
Name of the Student
Name of the University
Author note

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
Executive Summary
This paper will highlight how the introduction of drone technology will benefit Target Pty as
well as the customers. Identification of the stakeholders will help the company in delivering
proper service with this new innovation. Various social and environmental impacts will also
be discussed in the paper. The strategic responses and the cost benefit analysis will also be
discussed in the paper.

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
Table of Contents
1.0 Problem................................................................................................................................4
1.1Background.......................................................................................................................4
1.2Definition of the problem..................................................................................................4
1.3Evidence of the problem...................................................................................................4
1.4Timing considerations.......................................................................................................5
1.5Broader context.................................................................................................................5
2.0Benefits.................................................................................................................................5
2.1Benefits to be delivered.....................................................................................................5
2.2Importance to government................................................................................................6
2.3Evidence of benefits delivery............................................................................................6
2.4Interdependencies..............................................................................................................7
3.0Strategic response..................................................................................................................7
3.1Methods.............................................................................................................................7
3.2Strategic options analysis..................................................................................................7
3.2.1Strategic intervention.................................................................................................7
3.2.2Strategic options.........................................................................................................8
3.2.3Ranking of strategic options.......................................................................................8
3.2.4Recommended strategic option..................................................................................9
4.0Project option analysis........................................................................................................10
4.1Project option considered................................................................................................10
4.2Stakeholder’s identification............................................................................................10

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
4.3Social impact...................................................................................................................10
4.4Environmental impacts....................................................................................................11
4.5Economic impacts...........................................................................................................11
4.6Overall evaluation...........................................................................................................11
4.6.1Cost-benefits analysis...............................................................................................11
4.7 Financial Analysis..........................................................................................................12
References................................................................................................................................14
Appendices...............................................................................................................................16
Appendix 1: Benefit Management plan...............................................................................16

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
1.0 Problem
1.1Background
Target Australia Pty is a retail business that carry out chain store in the country to sell
various types of goods such as clothing, cosmetics, electronics and others. It is owned by
Westfarmers that operates 308 stores in the country. The company operates it own online
store as well to offer home delivery to the customers. However the company is recently
facing various types of problems with its delivery services due to its staffs. This has made it
tough for the company to cope up with the tight competition faced from the retail business
(Target Online Shopping | Target Australia. 2017). The paper discusses about the
introduction of drone technology to solve the problem faced by Target Pty.
1.2Definition of the problem
The company is facing problem with its online delivery service that it offers to its
customers leading to fall in its demand. The problem is due to the lack of staff cooperation
and management for the online service that is in great demand in today’s world. Such bad
online service affects the company as well as the customers because the customers does not
get their things in time and the company fails to offer high class services (Kwon, Kim& Park,
2017). This has caused a reduction in the loyalty rate of the customers towards the company
making them difficult to survive in the competitive environment of online services.
1.3Evidence of the problem
The demand of the company is falling over time due to its problem in its online
services as there are various other options available to the consumers in the market. The
company has faced a fall in its demand from customers that it forecasted to be around 2
million customers in a year. It has only got a traffic of 1million customers which is much less
than the target. Key performance indicator that the company that faced a problem is the

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
delivery of service within the stipulated time, minimum damaged goods reaching the
customers and others. However, it was seen that the company faced a lot fo problem in
meeting its delivery goals (Muthukrishnan &Winiski, 2016). For example maximum time of
reaching the customers is set by the company at 2 to 3 days. However the company failed to
do it and was always late because of lack of staffs support.
1.4Timing considerations
The issue needs to be met by the government as soon as possible because the online
market is increasing rapidly. Every company is introducing their own website to offer online
service to customers at their home. Thus it requires the government to take necessary steps to
introduce drone technology to improve its online services again. However a failure to meet
the problem now might result in problems such as losing the online market share, failure to
abide the legislation requirement, failure to meet the lead time and reduction in customer
traffic for the company (Borden, 2017).
1.5Broader context
Drone technology that the company will introduce to solve the problems arising in its
online services will also help the company to solve other problems such as building good
customer relationship, gaining more customer base, reducing the cost of recruiting staffs for
delivery services and maintenance of better database. These opportunities are offered by the
drone technology that the company is aiming to introduce because drone is a type of a
satellite enabled device that helps carrying goods to customers by means to tracking their
address.

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
2.0Benefits
2.1Benefits to be delivered
Use of drone technology by the company not only put many benefits on the company
as well as on the economy in which it is taking place. One of the most important benefits that
drone offer is the fastest and hassle free delivery option to the customers and help the
company to deliver their goods easily. This benefits the company as well as the society taking
delivery service from the company using drone. Drone helps in delivering difficult and
inaccessible areas easily which will allow the company to expand its business to these areas
as well. Next benefits of reduction in cost due to reduction in staff usage for delivery
services. Drone also assist the government to carry out environment sustainability project by
offering pollution free services compared to traditional delivery sources through roads and
rail (Hong, Kuby& Murray, 2017).
2.2Importance to government
Drone technology will be important to government as it is an environmental friendly
technology that will help the government to carry out their sustainability work easily. This is
because drone does not emit harmful emission into the environment like traditional sources of
delivery by road and rail transport (Chen, 2017).
2.3Evidence of benefits delivery
The key performance indicators that will give the evidence about the benefits drone
technology has offered to the Target Pty are:
1. Reduction in delivery time form before
2. Customer’s comments and opinion after the introduction of technology
3. Government opinion after the introduction of drone
4. Increase in number of customer traffic

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
The baseline and details of key performance indicator is given in appendix 1.
2.4Interdependencies
Interdependencies that Target Pty can depend in to achieve maximum gain from the
drone project is the sustainable project. The benefits of drone can easily be measured by
sustainability it achieves. Thus sustainability and drone usage can depend on each other
(Marin, 2017).
3.0Strategic response
3.1Methods
The method that can be used to judge the intervention procedure is the secondary
sources because it will help to get a detail knowledge about the benefits of various
intervention technique that the company will use to reach its potential customers about the
drone technology.
3.2Strategic options analysis
3.2.1Strategic intervention
The strategic intervention can be used by the company for each of its intervention
procedure. For the intervention one the company can use social media by posting
advertisement about drone usage and its benefits that the new generation can learn about. In
intervention 2 the company can sue email messaging where it can write about the technology
and the way it is assisting the delivery services. Lastly it can also print pamphlets to reach out
to the customers that are not active in the internet and are the potential customer of the
company. These three intervention for the strategic intervention of Target Pty (Tuten&
Solomon, 2014).

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
Strategic Interventions
Intervention 1: Through Online channels such as social media which is the most
commonly used technology by every household
Intervention 2: direct marketing by emailing and messaging the customers about the
introduction of new drone technology
Intervention 3: By offering leaflet and pamphlet to the existing customers to educate
them about their new technology
Table1: strategic intervention
Source: Author’s creation
3.2.2Strategic options
With the strategic interventions the company can also target various options for each
strategic responses. For online intervention it can use social media, YouTube, twitter and
other social media portal to enter the market with its new technology. Social media Facebook
gaining the maximum importance. For direct marketing it can use emailing method or also
messaging methods. Lastly, for traditional method it can use pamphlet or telephone call.
From all the three intervention online method with the help of social media is of utmost
importance for the company (Risselada,Verhoef & Bijmolt, 2014).
3.2.3Ranking of strategic options
Strategic options
Option 1 Option 2 Option 3
Social Media Emailing Pamphlet
DistributionBenefits
Percentage of full benefit to be
delivered
50% 25% 25%
Benefit Increase in customer % 60% 25% 15%

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
1 traffic
Benefit
2
Maximum awareness
about drone
% 50% 25% 25%
Benefit
3
Lowest cost % 30% 50% 20%
Cost
Estimated capital investment cost
(Range)
$1mil - $1.5
mil
$.25 mil - $.50
mil
$3 mil - $5 mil
Estimated operational costs (Range) $1 mil - $2
mil pa
$.30 mil - $.60
mil pa
$2 mil - $3 mil pa
Time
(Range) three month two month One months
Risks
Risk 1 (low attention) low medium High
Risk 2 (less customer attraction) low medium high
Dis-benefits
Dis-benefit 1 (no recognition) no yes yes
Dis-benefit 2 (less revenue) no no yes
Ranking
1-3 1 2 3
Table2: Ranking strategic options
Source: Author’s creation
3.2.4Recommended strategic option
The recommended technique of intervention for drone technology by the company is
the online method through social media. This medium is the most used medium and has the
potential of attracting maximum customer traffic. Moreover, the cost is very low compared to
other medium of intervention. Further any new message regarding changes in technology can
be easily conveyed through public through social media page.

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
4.0Project option analysis
4.1Project option considered
Project options available for online, direct and traditional method of intervention are:
1. Online source has the maximum source of educating customers. It also has the most
customer attraction and revenue generating options. This option can be easily
accepted by the government for its benefits. Social media is growing at a very fast rate
in today’s technologically advanced world.
2. Emailing is yet another option and is the easiest method of informing the people by
just mailing them the details of the project. This method can also be easily accepted
by the government.
3. Last is the pamphlet method which has the let potential of attracting customers as
most of the customers does not bother to read the pamphlet they receive. This method
is not readily accepted by the government due to the attracted environmental risk
because of paper usage.
4.2Stakeholder’s identification
The key stakeholders of the project drone are the customers, the managers of the
company and employees. With the introduction of this technology the customers and
manager will gain the most from because of the easiest delivery option available to them.
While the employees will suffer and most of the sales staffs will be put out by the company
after this technology is introduced (Drucker, 2014).
4.3Social impact
The project drone will offer a lot of social benefit to the customers as well as to the
society by delivery their goods fast and in a safe manner. It will also deliver goods to the

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USE OF DRONE SERVICE IN FASTER DELIVERY OF TARGET PTY
regions inaccessible by traditional method. However, it might hurt the society by increasing
the unemployment rate due to sale staff dismiss (de Lusignan, et al., 2014).
4.4Environmental impacts
Environmentally drone is very sustainable as it is pollution free and does not emit any
harmful gases in the atmosphere like the traditional delivery method that uses roads and rail
transport for delivery.
4.5Economic impacts
With the introduction of drone the company will be able to increase its revenue
annually. This intern will also help the economy to increase its GDP rate over the years. Thus
the project also has a lot of economic benefit. However it might hurt the economy by
increasing unemployment rate and low workforce participation.
4.6Overall evaluation
Thus from the above analysis it can be seen that the introduction of the project will
have both positive and negative impact on the company and on the economy in some way or
the other. However, it will benefit the customers in all way by getting the most efficient way
of delivery services.
4.6.1Cost-benefits analysis
Cost to the society because of using drone technology is increased unemployment
rate, decreased workers participation rate. On the other hand benefits are increased customer
traffic, improved delivery services, improved GDP, increased revenue and environment
friendly technology. Thus its can be seen that benefits are more than the cost for using this
technology.