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The reason is simple: Demand for drone delivery in e-retail is high but the ability to meet that demand is very low.For a city like New York, the optimal design for the test locations, based on all factors, is three drone facilities covering 75 per cent of NYC area and 34 per cent of the population."Opening a fourth facility increases area and population coverage to 84 per cent and 38 per cent, respectively, but the increase in operation cost is not enough to cover the facility costs," said the researchers from University of Waterloo in Ontario, Canada."We analyse the tradeoffs between distribution costs and revenues under varying social difficulties with drones like customer preferences and regulatory and technological limitations," said Fatma Gzara, a professor in the Department of Management Sciences at Waterloo."We then can make educated decisions on how many facilities to open, which services to offer at that facility and which services to make available to customers in certain areas," she added.The new research, published in the journal Transportation Science, looked at how possible and desirable it is to use drones for delivery for e-retailers considering cost and effectiveness in certain population areas and in certain locations.The study, conducted by Gohram Baloch and Gzara, used New York City as an example and looks at data surrounding the Manhattan area.The authors separated the area into boroughs based on population and size.Baloch and Gzara said they chose New York because the world's largest e-retail company, Amazon, first started its 2-hour delivery services in the Big Apple."Our results show that government regulations, technological limitations, and service charge decisions play a vital role in optimal configurations and drone target markets," said Gzara."Under current drone landing capabilities, a drone delivery service may not be possible in a densely populated area like Manhattan where demand for such a service is expected to be high," the researchers wrote.e-retailers can reach smaller markets and more price-sensitive customers by possibly offering discounts on drone-delivered orders, the findings showed.( With inputs from IANS )

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