Zipline

Solving the Worlds Delivery Problems by Simplifying

High-Tech

In the battle for global e-commerce dominance, delivery speed is critical to

providing a smooth and complete customer journey. This is why e-commerce

retail giants like Amazon, Walmart, and Google have been feverishly working

on different means of eliminating the problem posed by the last milethe

movement of goods from a distribution hub to the final consumer. In addition

to working on establishing more effective fleets of delivery vehicles and

personnel, alternative delivery methods are being explored, including onground

autonomous delivery vehicles and robots as well as in-air drones. To

date, however, none of these companies has achieved success at scale with

these alternative delivery methods.

Enter Ziplinea Silicon Valley startup that has built a national drone delivery

system that works and is profitable. Founded just six years ago, Zipline did not

begin life as a drone company. Rather, Zipline was created with a single

mission: provide every human on Earth with instant access to vital medical

supplies. Far from being a solution in search of a problem, the founders of

Zipline set out to solve the problem of delivering needed medical supplies fast

in environments where doing so posed particularly high problems.

Zipline began by studying medical supply delivery conditions in developing

countries that lacked an extensive ground-based transportation infrastructure.

In such an environment, drone delivery emerged as the best solution. However,

because they were highly complex and expensive to implement and operate,

none of the existing technologies for drone deliveries was viable. If Zipline was

to be successful in creating a network that would serve even the poorest income

countries, the founders knew they had to develop their own system.

It took Zipline about three years to devise a simple and unique system that

could be launched and expanded quickly at a cost that was feasible. The

Zipline system starts with a hub that is part fulfillment center, part drone port.

Each hub operates a fleet of 30 drones, delivers hundreds of different medical

supplies, and is run by roughly two dozen employees. The target capability is

to make hundreds of deliveries each day to any point within a service area of

8,7850 square miles.

Zipline drones were designed to be lightweight, durable, and easy to prepare

and reuse. Each has a polystyrene shell wrapped around a carbon-fiber frame

and a 12-foot wingspan. A supply compartment in the belly of the drone easily

secures a standardized package of up to four pounds. Equipped with dual

propeller-driven, battery-operated motors for redundancy, each drone is able to

operate safely on just one. A catapult-launch system sends drones high into the

sky, ramping up quickly to a top speed of 80 miles per hour and achieving a

round-trip range of 100 miles, with an average delivery time of 30 minutes.

The simplicity of the Zipline system extends to order and delivery. Medical

providers place an order via SMS text or a messaging app. Personnel at the

distribution hub load the package in the plane after scanning a QR code that

tells the drone the precise delivery location. After notifying the customer via

app of the delivery time, the drones cargo bay releases the medical-supply box,

which parachutes gently down to a designated drop spot for retrieval. Upon

return to the distribution center, the drone flies over a wire set 15 feet above the

ground catching its tail and pulling it safely to the ground. It is then collected

and readied for another flight.

As a first venture, Zipline partnered with the Government of Rwanda to launch

the worlds largest medical drone delivery service. In less than a year, Zipline

was delivering 148 different life-saving vaccines, blood products, and

medications out of four distribution centers to over 2,000 health facilities,

serving 12 million people throughout the country. The service operates 24

hours a day, seven days a week and makes 600 on-demand delivery flights each

day, expandable up to 2,000. Ziplines network has transformed Rwandas

medical supply chain, ensuring hospitals always have access to blood products,

which has increased the use of specialized blood products by 175 percent and

reduced waste and spoilage by more than 95 percent.

With a successful nationwide drone delivery network established, Zipline

explored opportunities for expansion. Unexpectedly, the biggest opportunity

came from the unfortunate transmission of the SARS-CoV-2 virus to pandemic

proportions in Spring 2020. During this pandemic, Zipline focused its attention

on the US market where the problem of delivering medical supplies to remote

locations was not the problem. Rather, the US problem centered on a healthcare

system characterized by high medicine waste, expensive emergency trips, and

suboptimal care strategies. The end problem, however, was similarpatients

were not getting the best care possible.

Zipline entered the US medical supply delivery market with a strategy that was

distinct from its Rwanda operation center in various ways. First, Zipline

partnered with Novant Health, a nonprofit healthcare provider with operations

in the Southeastern United States rather than partnering with a government

organization. Second, it focused on a small geographic area, setting up its triedand-

true drone system to deliver personal protective gear and medical

equipment in North Carolina. And third, it started operations delivering

needed supplies between only two locationsNovant Healths emergency

drone fulfillment center in Kannapolis and the companys medical center in

Huntersville, 32 miles awayvia two routes.

The rapidly evolving pandemic situation created an urgency that required

some improvisation. Zipline established a launch site quickly using space

donated by Steward-Haas Racing, a local NASCAR competition team. The

operation also sought and was granted regulatory approval by the FAA

through a waiver that classified the Zipline-Novant partnership as a

distribution versus delivery operation. This allowed Zipline to begin medical

supply deliveries much sooner than if it had gone through the lengthy process

of obtaining a commercial drone license. Similar to the building of its network

in Rwanda, Zipline found that governments that understand the critical need to

save lives will adjust regulations to accommodate new technologies.

The Zipline-Novant partnership has already borne fruit. Zipline and Walmart

announced that the two companies would begin on-demand drone delivery of

health and wellness products in 2021, with trial routes near Walmart

headquarters in Arkansas. The intention is to expand operations nationwide as

part of Walmarts efforts to use drones in order to be more competitive against

Amazon and other e-commerce retailers. It also gives the retail giant access to

customers who were otherwise wary about going to the store during a

pandemic. Zipline will operate from a Walmart store and can service a 50-mile

radius, said Tom Ward, Walmarts senior vice president of customer

product. And, not only does their launch and release system allow for quick

on-demand delivery 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 amount of time,

solving problems that more technically advanced companies have struggled

with. Thus far, Zipline has raised $225 million in capital funding, propelling the

value of the company to well over $1 billion. With operations expanding into

Ghana, India, and Philippines, Ziplines growth has more to do with how

quickly it can get operations up and running than with global need. It certainly

faces competition. But with the young market just beginning to take off, there is

plenty of room for other providers.

In addition to financial success, Zipline is accomplishing its mission. There is a

growing feeling around the world that technology is not benefitting the vast

majority of people, said Zipline CEO Keller Rinaudo. The old

conventional wisdom has been that building a successful technology company

requires exploiting peoples personal information or hijacking their attention.

Zipline wants to establish a new model for success in Silicon Valley by showing

the world that the right technology company with the right mission and the

best team can help improve the lives of every person on the planet.

1. Which of the following are part of the Zipline value delivery network in this case?

Zipline, Novant Health, and patients at the medical center

Zipline alone

Zipline, the manufacturers of personal protective equipment, Novant Health, and

patients at the medical center

Manufacturers of personal protective equipment, Novant Health, and patients at the

medical center

Zipline and Novant Health

2. When Zipline delivers medical supplies to a medical provider, this is an example of a direct

marketing channel.

True

False

3. In the distribution process, Zipline can be considered a(n):

supplier

manufacturer

wholesaler

intermediary

retailer

Marketing Case Study: Zipline - Q3

4. Addressing the last mile problem in a manner that is more efficient than existing solutions

illustrates how Zipline adds ___________________ to the delivery of medical supplies.

value

complexity

cost

channel levels

time

5. In the future, which of the following would be the best advice to Zipline toward fulfilling its

mission?

explore various methods of delivering medical supplies to customers in need

always enter joint-ventures with organizations as that has been successful thus far

stick to developing countries as that is where there is the most need.

continue developing its drone technology to make it even more efficient

offer Zipline for sale to a larger company with the resources to take it to greater heights