When the coronavirus pandemic hit, it’s no secret that small businesses were severely hurt as people stayed at home. There’s no need to patronize the coffee shop underneath your office when you’re working from home, and why go out to eat when it’s safer to cook in your own kitchen? Revenues dropped 36% at full-service restaurants by the end of May 2020, according to a JP Morgan report on small business sales.
But could drone delivery be what it takes to generate sales for struggling small businesses? For Mockingbird Cafe, a bakery in Christiansburg, Virginia, the answer might be yes.
The cafe’s owners say drone delivery has accounted for about 25% of its sales during the COVID-19 pandemic. Mockingbird Cafe is one of the companies partnering with Wing, the drone delivery-sibling company of Google. Eligible residents of Christiansburg can place orders for items on the Mockingbird Cafe and can select to have them delivered to their homes. For some, it’s a novelty. For others who aren’t leaving their homes due to the pandemic, it’s a necessity.
Related read: 6 things to know about Wing delivery drones
A recent study by Virginia Tech modeled the potential impact of drone delivery on small business sales, and their results largely back up Mockingbird Cafe’s anecdotal evidence. (Note that the study was also commissioned by Wing, so take conclusions with that grain of salt).
Virginia Tech modeled the effects of drone delivery on small business sales within three metropolitan areas over the course of the first five years of launch: Christiansburg, Virginia; Austin, Texas and Columbus, Ohio. The numbers were based on a combination of qualitative interviews, economic modeling and traffic simulations.
According to their models, drone delivery could estimate the following additional sales over the first, five-year period in a single city:
- Up to $208,000 in additional sales for retail businesses
- Up to $145,000 in additional sales for table-service restaurants
- Up to $284,000 in additional sales for limited-service restaurants
Larger cities would see a higher revenue gain (though their operating costs are likely higher too. Here’s how Virginia Tech broke it down by the three cities in their study:
The Virginia Tech study largely chalked the positive impact of drone delivery on small business sales to the fact that drones can deliver goods more quickly than a human courier. Traditionally to buy stuff, the consumer would get in their car, park, walk through the mall, find their item and then check out with a human.
By eliminating all of that, Virginia Tech suggested that consumers can save time by drone delivery (though it seems the time savings would be similar to other delivery methods). Especially for customers who live in less-densely populated areas, consumers could save an estimated 31.5-56.7 hours of time annually by not having to drive to pick up orders.
There’s also the fact that new customers could be reached. Someone without a car might not order from the restaurant on the other side of the freeway that’s unsafe to walk to, or they might never patronize a shopping center that isn’t located near a bus line. Drones can expose new customers to stores.
But there’s also the marketing aspect. Virginia Tech also suggest that drones could deliver to ‘new customers’ – and that could very well just be customers who might otherwise just not be interested. If you want a pizza and don’t particularly care whether it’s from Domino’s or Papa John’s, why not go for the one that comes with some free entertainment in the form of a delivery drone showing up at your house?
Drone delivery has especially been touted as legitimately useful in settings like medicine delivery — getting medication to people unable to leave their homes. But even small businesses who sell non-essentials could likely benefit from drone delivery. A big reason why drone delivery in the retail and dining sector has a shot: COVID conditioned us to buy everything online, including food. What’s more, food delivery sales through online sites and mobile apps is expected to grow as much as 22.3% annually by 2024.
Of course, for all the positive sales outcomes, there’s always a cost. Virginia’s Tech numbers did not necessarily account for the operating costs of drone delivery purely in terms of running the drones and paying humans to manage them. And even still, given complicated regulations and existing challenges, such as how to fly over people, it’s unlikely that small businesses will be adding drone delivery as an option anytime soon, unless they have backing from a major company like Wing.