In the battle for global e-commerce dominance, delivery speed is critical to providing a smooth and complete customer jo

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In the battle for global e-commerce dominance, delivery speed iscritical to providing a smooth and complete customer journey. Thisis why e-commerce retail giants like Amazon, Walmart, and Googlehave been feverishly working on different means of eliminating theproblem posed by the “last mile”—the movement of goods from adistribution hub to the final consumer. In addition to working onestablishing more effective fleets of delivery vehicles andpersonnel, alternative delivery methods are being explored,including on-ground autonomous delivery vehicles and robots as wellas in-air drones. To date, however, none of these companies hasachieved success at scale with these alternative deliverymethods.
Enter Zipline—a Silicon Valley startup that has built a nationaldrone delivery system that works and is profitable. Founded justsix years ago, Zipline did not begin life as a drone company.Rather, Zipline was created with a single mission: “provide everyhuman on Earth with instant access to vital medicalsupplies.”1 Far from being a solution in search ofa problem, the founders of Zipline set out to solve the problem ofdelivering needed medical supplies fast in environments where doingso posed particularly high problems.
Zipline began by studying medical supply delivery conditions indeveloping countries that lacked an extensive ground-basedtransportation infrastructure. In such an environment, dronedelivery emerged as the best solution. However, because they werehighly complex and expensive to implement and operate, none of theexisting technologies for drone deliveries was viable. If Ziplinewas to be successful in creating a network that would serve eventhe poorest income countries, the founders knew they had to developtheir own system.
It took Zipline about three years to devise a simple and uniquesystem that could be launched and expanded quickly at a cost thatwas feasible. The Zipline system starts with a hub that is partfulfillment center, part drone port. Each hub operates a fleet of30 drones, delivers hundreds of different medical supplies, and isrun by roughly two dozen employees. The target capability is tomake hundreds of deliveries each day to any point within a servicearea of 8,7850 square miles.
Zipline drones were designed to be lightweight, durable, andeasy to prepare and reuse. Each has a polystyrene shell wrappedaround a carbon-fiber frame and a 12-foot wingspan. A supplycompartment in the belly of the drone easily secures a standardizedpackage of up to four pounds. Equipped with dual propeller-driven,battery-operated motors for redundancy, each drone is able tooperate safely on just one. A catapult-launch system sends droneshigh into the sky, ramping up quickly to a top speed of 80 milesper hour and achieving a round-trip range of 100 miles, with anaverage delivery time of 30 minutes.
The simplicity of the Zipline system extends to order anddelivery. Medical providers place an order via SMS text or amessaging app. Personnel at the distribution hub load the packagein the plane after scanning a QR code that tells the drone theprecise delivery location. After notifying the customer via app ofthe delivery time, the drone’s cargo bay releases themedical-supply box, which parachutes gently down to a designateddrop spot for retrieval. Upon return to the distribution center,the drone flies over a wire set 15 feet above the ground catchingits tail and pulling it safely to the ground. It is then collectedand readied for another flight.
As a first venture, Zipline partnered with the Government ofRwanda to launch the world’s largest medical drone deliveryservice. In less than a year, Zipline was delivering 148 differentlife-saving vaccines, blood products, and medications out of fourdistribution centers to over 2,000 health facilities, serving 12million people throughout the country. The service operates 24hours a day, seven days a week and makes 600 on-demand deliveryflights each day, expandable up to 2,000. Zipline’s network hastransformed Rwanda’s medical supply chain, ensuring hospitalsalways have access to blood products, which has increased the useof specialized blood products by 175 percent and reduced waste andspoilage by more than 95 percent.
With a successful nationwide drone delivery network established,Zipline explored opportunities for expansion. Unexpectedly, thebiggest opportunity came from the unfortunate transmission of theSARS-CoV-2 virus to pandemic proportions in Spring 2020. Duringthis pandemic, Zipline focused its attention on the US market wherethe problem of delivering medical supplies to remote locations wasnot the problem. Rather, the US problem centered on a healthcaresystem characterized by high medicine waste, expensive emergencytrips, and suboptimal care strategies. The end problem, however,was similar—patients were not getting the best care possible.
Zipline entered the US medical supply delivery market with astrategy that was distinct from its Rwanda operation center invarious ways. First, Zipline partnered with Novant Health, anonprofit healthcare provider with operations in the SoutheasternUnited States rather than partnering with a governmentorganization. Second, it focused on a small geographic area,setting up its tried-and-true drone system to deliver personalprotective gear and medical equipment in North Carolina. And third,it started operations delivering needed supplies between only twolocations—Novant Health’s emergency drone fulfillment center inKannapolis and the company’s medical center in Huntersville, 32miles away—via two routes.
The rapidly evolving pandemic situation created an urgency thatrequired some improvisation. Zipline established a launch sitequickly using space donated by Steward-Haas Racing, a local NASCARcompetition team. The operation also sought and was grantedregulatory approval by the FAA through a waiver that classified theZipline-Novant partnership as a distribution versus deliveryoperation. This allowed Zipline to begin medical supply deliveriesmuch sooner than if it had gone through the lengthy process ofobtaining a commercial drone license. Similar to the building ofits network in Rwanda, Zipline found that governments thatunderstand the critical need to save lives will adjust regulationsto accommodate new technologies.
The Zipline-Novant partnership has already borne fruit. Ziplineand Walmart announced that the two companies would begin on-demanddrone delivery of health and wellness products in 2021, with trialroutes near Walmart headquarters in Arkansas. The intention is toexpand operations nationwide as part of Walmart’s efforts to usedrones in order to be more competitive against Amazon and othere-commerce retailers. It also gives the retail giant access tocustomers who were otherwise wary about going to the store during apandemic. “Zipline will operate from a Walmart store and canservice a 50-mile radius,”2 said Tom Ward,Walmart’s senior vice president of customer product. “And, not onlydoes their launch and release system allow for quick on-demanddelivery in under an hour, but it also eliminates carbon emissions,which lines up perfectly with our sustainability goals.”
Zipline has achieved tremendous success in a very short amountof time, solving problems that more technically advanced companieshave struggled with. Thus far, Zipline has raised $225 million incapital funding, propelling the value of the company to well over$1 billion. With operations expanding into Ghana, India, andPhilippines, Zipline’s growth has more to do with how quickly itcan get operations up and running than with global need. Itcertainly faces competition. But with the young market justbeginning to take off, there is plenty of room for otherproviders.
In addition to financial success, Zipline is accomplishing itsmission. “There is a growing feeling around the world thattechnology is not benefitting the vast majority ofpeople,”3 said Zipline CEO Keller Rinaudo. “The oldconventional wisdom has been that building a successful technologycompany requires exploiting people’s personal information orhijacking their attention. Zipline wants to establish a new modelfor success in Silicon Valley by showing the world that the righttechnology company with the right mission and the best team canhelp improve the lives of every person on theplanet.”4
1.What are the factors that made Zipline such a rapidsuccess?