Zipline drone delivery is changing the face of the healthcare logistics industry, which has traditionally been dependent on surface transport by introducing drone delivery. As the drones can cover a huge distance and can deliver with precision (using GPS), this may be the future of all critical medical supplies delivery.
Zipline drone delivery is serving the healthcare logistics industry by delivering essential medical supplies to customers in need with the help of its plane like drones. Zipline’s drones, also called zips have flown more than 1 million kilometers and made more than 13,000 deliveries.
In this article, we do a deep dive analysis of Zipline’s business model and its growth prospects in the healthcare logistics industry and beyond.
How Zipline started with the perfect location?
Zipline is a San Francisco based UAV start-up. The California based company, chose to kick start its operations in Rwanda, East Africa. This might initially sound off the ground for an advanced technology to start in a rural district. But, the idea was to serve the healthcare logistics industry by providing medical essentials to the ones who are unable to access it when they need it. This is how the founders started operating Zipline drone delivery in Rwanda along with the Aviation Authority and made commercial contracts with the Ministry of Health. Zipline widened its operations to Ghana after being fully functional for one year in Rwanda.
Starting with these small states of East Africa allowed the company, complete freedom to modify their infrastructure. There were lesser air regulations to abide in Rwanda as compared to the US or UK. Airspace in the US and Uk would also be busier than Rwanda which could cause hindrance in the initial testing of Zipline drone delivery. The smaller team at Civil Aviation Authority also allowed the company to make decisions faster and implement them quickly. Now, after 4 years of operations in these two countries, Zipline has a solid infrastructure set up for its planes, network, communications, and distribution centers. It will not be difficult to set up drone delivery in the US and other developed countries after developing a completely tested technology in Rwanda.
Is Zipline Drone Delivery Scalable?
Zipline drone delivery works on an entirely new technology developed by the team itself. The company only requires land as a basic infrastructure to set up distribution centers and deliver medical essentials 24×7. They had set up a distribution center by clearing a cornfield in Rwanda. For moderately populated countries like the United States, space will not be a constraint to start Zipline drone delivery for healthcare logistics.
Zipline drones can perform hundreds of deliveries per day with a speed of 100kmph, which allows them to fly more than 40,000 km per day. These zips are reliable even in the worst conditions of nature. Zips can fly even in the strangest conditions of nature, they can fly from the hot deserts of California to the rainy storms of Rwanda. This makes the company extremely scalable and easy to adapt to various locations. The company can easily expand to several other locations with this cutting edge adaptable technology.
How is Zipline different?
Hospitals face immediate requirement of blood during complications during C-Sections or accidental cases etc. However, they lack immediate availability of blood due to which they have to either depend on surface transport that takes long time or store blood within their premises which takes lot of space and investment. Moreover there is a risk of wastage of blood as it is perishable. This is a typical healthcare logistics problem present in most of the countries.
Zipline is solving this problem by providing just in time delivery of essential medical supplies such as blood, plasma etc using its drones. We expect that healthcare logistics can become extremely efficient with Zipline drone delivery.
Zipline has designed its drones in an airplane structure instead of a quadcopter. The company has been able to cover a delivery radius of 150 kilometers with these planes, a quadcopter would have only functioned till 5-10 kilometer radius. This ultimately helps Zipline to go farther and reach more remote locations. A quadcopter covers around 10,000 people but these airplanes also called zips are able to deliver to over 7 million people.
Zipline has designed its own airplanes right from scratch. The team has been constantly improvising and today has more than 7 generations of these zips. Interestingly, they have built these zip on various technologies that already existed. They have leveraged GPS, battery systems, and software technologies and in turn, developed an innovative product based on these existing technologies.
Zipline drone delivery has 3 co founders, who are not only well qualified but also have immense experience and passion:
- Keller Rinaudo is the CEO & co-founder of Zipline. A Harvard University graduate, Keller has previously worked as a software engineer and is a professional rock climber. He became one of the youngest first authors in publication’s history after publishing his research in Nature Biotechnology. Before founding Zipline, he had developed Romo, an iPhone-controlled robotic toy.
- Keenan Wyrobek is co-founder and heads Product and Engineering at Zipline. Prior to Zipline, he was a co-founder and director Personal Robotics Program at Willow Garage.
- Will Hetzler is a co-founder at Zipline. He is a forward-trained economist who formerly worked closely with the aviation industry. Hetzler advised companies on various topics like high bypass turbofan engine maintenance, technical sourcing, etc.
The second in command team consists of following:
- Eric Watson is a systems engineer at Zipline. He was also co-founder & CEO at Spectafy, Inc.
- Jo Blame is an embedded software engineer at Zipline
- Yaniv Gelnik leads global business development at Zipline. He has worked in numerous Fortune 50 companies as an advisor.
- Danie Czerwonka is the head of Regulatory Affairs at Zipline.
Zipline drone delivery started its operation in 2016 in Rwanda, East Africa. Since then it has employed 100% local Rwandans who work at these distribution centers. These locals are a group of engineers and operators. It has also helped the country’s manpower and created a plethora of employment for these people giving them an opportunity to build the world’s only automated drone delivery system. “Together we have been able to design something that the leading technology companies haven’t yet figured out,” says Keller Rinaudo.
This has helped the company to connect better with the country in which they are operating in and also contributed to the economic development of that country. When a company employs local labour for its operations, it becomes easier for the company to penetrate further in the country which is what we believe will happen with Zipline. Therefore, setting up more distribution centers and covering larger areas will not be a problem for them and they can further penetrate the healthcare logistics. They can also start training programs for the young kids from these countries who can later take charge of these distribution centers.
Funds Raised by Zipline Drone Delivery
The company has raised VC funding of $233M till date and well known investors have shown faith in Zipline drone delivery. The company has already become a unicorn as it was valued at $1.5bn in its last round of funding.
Following are the details of various funding rounds till date:
- Series A funding of $18M in July 2015. It was led by Sequoia Capital and Visionaire Ventures.
- Series B funding of $25M was received in Nov 2016. Visionaire Ventures again trusted Zipline and became the lead investor for this round.
- Series C funding round of $70M was led by Katalyst in March 2018
- Series D funding of $120M in March 2019 with The Rise Fund as the lead investor.
Opportunities in the healthcare logistics industry
According to an IndustryARC report, the global healthcare logistics industry market is projected to reach $93.2 billion in 2021 from $73.48 billion in 2015. The sheer size of the healthcare logistics industry provides immense opportunities for Zipline drone delivery. Currently, they deliver blood plasma, vaccines, and platelets but can expand to several other health products, required on an emergency basis.
The objective of Zipline is to make blood available to the hospitals within 15-20 mins from the time when they need it, thereby eliminating the need for them to store it locally. Therefore Zipline has set up distribution centers strategically so that they cover more hospitals within the radius range of its drones. Zipline procure various types of units of blood in bulk and stores it at their distribution centers. This enables them to perform just in time drone delivery without wasting a single minute once the order is placed.
In the healthcare logistics, many non-essentials and secondary medical equipment can be delivered using Zipline drone delivery model, provided it makes economic sense. Zipline can also venture into the delivery of products such as bedsheets, masks, aprons, and other ancillary products required in hospitals. These products are used on daily basis to maintain hygiene in the hospitals, therefore hospitals have keep them in the inventory. With just in time drone delivery Zipline can help hospitals utilize the space to put more beds for the patients, and increase the hospital capacity.
How Zipline is helping the healthcare logistics
For Blood, hospitals often face a trade-off between access and wastage. Blood has a very short shelf life, but the hospitals having emergency units have often store more units of blood (across blood groups), but this ultimately results in wastage of the unused blood units. On the other hand, hospitals which do not store blood need to make sure that they get access to it whenever they need it, which might often be difficult. This is one of the biggest problems of the healthcare logistics industry which is partially solved by blood banks.
Zipline drone delivery ensures that the doctors can serve their patients without worrying about the availability of units and type of blood required. Zipline’s distribution centers are located in a way that they can cover a maximum radius and are can execute most deliveries in a day. With its advanced technology, Zipline drone delivery has been able to deliver blood, plasma, and platelets to hospitals within 15-20 mins. As a result, the units of blood used in every hospital has increased and Zipline has been successful in wasting zero units of blood since their operation in Rwanda.
What else can Zipline drone delivery venture into?
An estimated one billion people do not have access to all-weather roads, as per The World Bank Report. Zipline’s services can serve this audience as well to provide essential medical supplies. Infact, the drones can also be used to deliver other non-essential products as the cost of drone delivery may be much lesser than surface transport. Moreover the time saved in getting the products can also be another benefit. This way, Zipline can find use of its service beyond healthcare logistics as well.
Drone Delivery in the hills / countryside
Zipline can also venture into delivering essential products; medical and general supplies to people who stay in the hills or countryside. Buying everyday essential can be a task for these people as they are cut-off from roads, etc. Zipline can solve their problem as well and provide them with essentials and non-essentials deliveries.
Rescue operations & natural disasters
Zipline can also use this technology in rescue operations. For example, it can provide people stuck in deserted land with food and water until the rescue operations complete. Zipline drone delivery can also be used at time of natural calamities like floods, when the surface transport becomes impossible.
Partner with Military to deliver medical supplies
Another useful application for Zipline drone delivery can be in military where it can used to deliver critical supplies in mass causality situations. The major advantage would be to reach out to the severely hit areas, whereas it may not be possible to reach by surface. Moreover, as the drone have a range of around 100km, they can be of immense use in war type situations.
In fact, it has already done testing with US military and may be inducted soon. However, there may be challenges like shooting down / hacking of the drones in the battlefield. Moreover, flying at the same time or frequency as other war aircraft can be another challenge. However, we feel that Zipline should be able to overcome these challenges soon.
Expand to developing countries
Developing countries normally have a broken healthcare logistics system and Zipline drone delivery can be immensely useful in such countries. Zipline has recently tied-up with MedikaBazaar, an Indian online B2B platform for medical supplies, surgical instruments, etc. Zipline will deliver products for MedikBazaar in India. These include critical life-saving equipment and cold-storage dependent pharmaceuticals.
Partner with E-commerce and Retail companies
Apart from essentials, there are a few very obvious platforms for Zipline, which are the e-commerce companies. These companies are purely dependent on logistics as the model is based on at-home delivery.
Although, Amazon is planning its own ‘amazon drone delivery’ service but as Zipline specializes in drone delivery and can offer it at low cost, big players such as Amazon and Walmart may want to partner with it. Zipline drone delivery can help companies like Amazon to go from ‘same day delivery’ to ‘same hour delivery’. Infact, Zipline is also already in talks with Walmart to start delivering health and wellness products in North Carolina.
Similarly, Zipline drone delivery can venture into other developing countries, and can contribute to improve their healthcare logistics.
Why it is not viable for non-essentials right now
Zipline drone delivery may think beyond healthcare logistics and venture into the business of delivering daily essentials by increasing the capacity of its aircrafts. However, the cost of delivery may be more than that of surface transport, therefore it may not be viable currently. But, if they can do it at scale in future, then viability can be achieved.
We feel that the healthcare logistics is large enough that the company should focus on getting a larger share of the pie. Moreover, it is a pioneer in this field & given the nature of supplies, customers are willing to pay a high price for emergency medical deliveries due to a lack of alternatives.
Therefore, drone delivery of non-essentials may not be viable and suitable for the company at this time and it should focus only on healthcare logistics.
Zipline drone delivery, a boon in COVID era!
During the current pandemic, the traditional healthcare logistics supply chain has completely crashed. The hospitals are facing challenges in procuring even the essential medical supplies. Moreover, as the infection can spread by touch, therefore contactless delivery becomes another challenge.
Zipline drone delivery is a boon in such unprecedent times. As the drones are not dependent on surface transport or any manual labor, therefore they can operate as usual and make deliveries to the hospitals. Moreover, as the deliveries are made through parachutes and are completely contactless, they also minimize the risk of spreading infection. Both these purposes cannot be served by any other mode of transport. The best part is that the Zips have a capacity to fly 100 miles at a stretch which helps them widen their reach of service.
Zipline has promised no stock-out and has the ability to respond to aggressive demand. They have equipped their distribution centers according to the demand and plan to do so as long as the country needs relief.
The company has extended their operation in Ghana for COVID relief measure as well. They are currently delivering PPE kits and other essential medical equipment on just in time basis.
Zipline has already started operating in the US by partnering with Novant Health. They are actively delivering PPE kits and COVID test samples to health centers. The zips take off and land at the fulfillment centers, thereby ensuring complete contactless deliveries. Therefore Zipline drone delivery has proven to be a boon during the current covid era.
There are many drone delivery companies but here we focus only on those companies that are serving the healthcare logistics industry. Even in this sector, we can divide the competition into two categories:
- Airplane type drones that are similar to Zipline and
- Quadcopters, that use different technology
Airplane Structured drones
Lets first look at major players in this segment:
Vayu Drones is a drone delivery company, similar to Zipline, currently operating in Madagascar, Papua New Guinea, Peru, and Nepal. It delivers medical essentials and carries samples to laboratories for testing. Vayu Drones use VTOL (vertical takeoff and landing) technology, that allows its drones to land at destinations. Whereas, Zipline drone delivery drops parcels from zip’s belly, using parachutes. Currently, Vaayu drones is the closest competitor of Zipline.
Vaayu drones collects samples from inaccessible villages, takes them to the laboratories for testing, and provides results on the same day. This ensures that the required treatment can be started for the patients, without delay.
Vaayu drones may have an advantage over Zipline as their drones can also land at the destinations, thereby enabling two way transportation. However, it also has following limitations:
- People may not be aware of how to load samples in Vaayu drones.
- Empty space for landing may not be available everywhere.
- Landing and take off takes time, which can significantly reduce the number of flying hours and deliveries as compared to Zipline drone delivery.
Moreover, both these companies have different objectives. Vayu drone’s objective is to provide medical services to inaccessible, rural populations. It also aims to reduce the time taken in the process of sample testing, which delays the treatment. On the other hand, Zipline drone delivery’s objective is instant delivery of blood and vaccines. Zipline is targeting developing as well as developed countries as most of them face the problem of emergency blood supply which can be efficiently solved by their drone delivery service.
Another close competitor of Zipline drone delivery is DHL, that has recently launched drone services in Tanzania. Like Vaayu drones, DHL drones also use VTOL enabled technology. This allows DHL drones to receive test samples from various locations and bring them back to centers. Zipline had announced that they shall operate in Tanzania but the project didn’t start. Now, it appears that the needs are being fulfilled by DHL.
DHL is an established logistics company and healthcare logistics is their focus area. Therefore they have all the resources to target this segment and take away market share from Zipline drone delivery. Moreover, DHL drones are based on German technology whereas Zipline has developed its technology inhouse. We feel that Zipline will have to keep an eye on DHL’s next move in healthcare logistics space as DHL can easily start its drone delivery service worldwide and give Zipline run for its money.
Quadcopters are drones that are controlled using four rotors. Several start-ups are in the business of quadcopter delivery services and are actively targeting the healthcare logistics space. These companies are using drones for different medical emergencies. We look at few of them below:
Flirtey, a San Francisco based company is using quadcopters to deliver emergency first-aid kits.
EHang is the world’s first automated drone with is capable to accommodate a human being. The drones are for emergency organ donation, which requires the organs to be available immediately for transplants. It has signed a contract with Lung Biotechnology PBC in the US to develop 1000 units of its 184 drone.
TU Delft is a cardiac ambulance drone. The drone is deployed for a person having a cardiac arrest. The bystanders can use the cardiac defibrillator in the drone and perform CPR using the 2-way communication radio + video available in the drone.
Zipline drone design & data
Zipline has designed its drones in the form of airplanes. The flying range of zips is below 500 feet and they are completely tech-enabled. Zipline has leveraged every possible technology available to created its drones.
Mobile QR based Pre-flight check
Instead of manually checking each part, a mobile camera is used to scan the barcode placed on each part of the flight. The system automatically detects whether that part is functioning properly or not. Once all parts are scanned, the system prompts that the flight is ready for takeoff. This ensures that the zip is in the best condition to fly its life-saving mission.
Advanced algorithms and software tests enables the Zipline team to know where their planes are and where they need to deliver. The employees at the distribution center are in direct contact with the aviation authority, which simultaneously monitors the zips. The Aviation Authority tracks these zips in order to maintain safe airspace. In case of busy airspace or any other commercial aircraft emergency, the Aviation Authority can ask for the immediate landing of zips. In such a case, the plane stops midair and a parachute opens up automatically to bring the plane down safely.
Fault tolerant aircrafts
Zipline’s drones are fault tolerant aircrafts. This means that the aircraft is equipped with a secondary backup, in case the primary equipment fails. Zips have a backup for every part, the actuator, the motor, and every other part. This keeps the aircraft running even if one part fails!
A crash of an aircraft can cause serious damage to people on land. For this, it has an inbuilt parachute that opens automatically in case of an emergency. It allows a soft landing of the aircraft completely avoiding a crash and damage to the plane. Therefore, the same aircraft can be used again.The control tower can also bring any plane down in case of emergency. This technology has helped the Zipline drone delivery to have zero accidents since operations.
The most fascinating part about this innovation is that it takes only 0.3 seconds for these planes to reach a speed of 100kmph after launch.
GPS enabled batteries
The aircraft weighs 22kgs and the battery contributes half of the weight. Another innovation made by Zipline was to put the GPS in the battery so that it is within the aircraft at all given times. This increases aircraft’s efficiency of locating the target delivery area and the route etc. The GPS instructs the zip to reach its delivery location and execute delivery autonomously.
Once these batteries are plugged in for charging, they transfer all the data to the Zipline server. This gives Zipline access to large amount of flying data that can aid in further research & development. With such massive data in its kitty, Zipline can further refine its GPS service and start new routes. For every hour of flight, the batteries generate 1-gigabyte data. It is unimaginable of how much data the company server is holding at this point in time.
In the video below, Keenan Wyrobek, co-founder explains the various safety features of Ziplin’s drone delivery
Zipline made a good start in Rwanda and has made 13,000 deliveries till date with 0 failed deliveries. Rwanda proved to be a good testing ground for the company and gave it an opportunity to make several improvements in the drones as well as its operations. We feel that Zipline has proven its concept of drone delivery in healthcare logistics space and as a result raised large amount of venture capital funds.
Going forward, the next logical step for them should be to replicate their success across geographies. However, given the high air traffic and current regulations in US, it may not be an easy task. Although, it got certain waivers during covid era and is working with the authorities to develop rules for drone delivery but it may take some time. Therefore, the company may first expand to other developing countries like India, Philippines etc that have a broken healthcare logistics supply chain, implying a real need. Moreover, the company may be able to get waivers or permissions by partnering with the government or local companies.
We believe that Zipline drone delivery has already proven its mettle and has the potential to change the healthcare logistics space. It is only a matter of time when drone delivery of medical supplies will become the norm. Moreover, the company will also develop innovative use cases for its services and further improve the healthcare logistics supply chain.
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