Imagine it. Via an app you order a new mobile phone on Amazon or a burger at your favorite restaurant. Just 20 minutes later, you get a notification on your phone and head out to the backyard to watch a drone descend from the sky holding your package. Your package falls gently to the ground and the drone flies away. And it’s led by retail giants Amazon, Walmart, and a slew of food delivery companies.
I spoke with industry insiders to get the state of play and see an industry move from emerging to the mainstream, but before legal constraints.
Amazon Prime Air is And last but not least out of stealth mode after nearly a decade of prototyping more than 20 drones, with the company showing off its drones earlier this month.
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In June, Amazon announced plans to launch deliveries in Lockeford, Californiaand College Station, Texas. Residents choose items up to a total of 2.26 kg (4 lb) in weight. The items are packed in nearby warehouses and dropped in backyards.
In May, Walmart announced an expansion of the DroneUp delivery network to 34 locations by the end of the year, offering the potential to reach 4 million U.S. homes in Arizona, Arkansas, Florida, Texas, Utah and Virginia. This creates the capacity to deliver more than 1 million packages per drone in a year.
Customers can order items up to 4.5 kg (10 lb) for just $3.99 in delivery charges.
About 90% of Americans live within a 10-mile radius of one of Walmart’s more than 4,700 stores, meaning the capacity for future supply expansion is even greater.
And in Granbury, Texas, and three cities in North Carolina, drone operators Flytrex deliver restaurant meals. The company supplies orders up to three kilograms (6.6 lb), according to co-founder and CEO Yariv Bash:
For a dinner for a family that is just perfect. In the future we might build something bigger so we can deliver groceries too.
Earlier this month, the company received the Federal Aviation Authority (FAA) approval to fly up to 3.2 nautical km (two miles), expanding the potential delivery radius to reach 100,000 eligible customers across all operational stations.
Rocking the suburbs
What makes all this innovation interesting is that these drone delivery services avoid downtown. Inner-city areas are already brimming with ebike food, groceries, and medical delivery services.
According to David Benowitz, head of research at Drone AnalystDrone deliveries fill a need not currently met by ebike delivery services.
Visual Line of Sight is the pain of drone development
Currently, the biggest barrier to mainstream drone delivery is the requirement that drones be in the “visual line of sight” of a human operator. This means that the drone delivery does not only include the operational costs of the drones, but also the additional staffing. There have been only a few exceptions on a case-by-case basis. For example, in June, drone operator zip line receive part 135 certification to deliver medicines.
However, earlier this month, the White House hosted a top on advanced air mobility. It was attended by drone and VTOL operators. Billy Nolen, acting administrator for the FAA, explained that one of the authority’s priorities is standardized rules for operations beyond line of sight (BVLOS).
Benowitz claims the FAA has an old-fashioned aviation mindset: “The aviation regulatory agency is super risk averse because how they measure their work is how many people die on commercial airlines, which doesn’t apply to drones.”
He suggests that Walmart, traditionally a risk-averse company (also using Gatik autonomous truck deliveries), could lead the way with fully remote autonomous operators in a number of locations, but also admits that incremental progress has its advantages:
You must walk before you run. How can you model security and autonomy if you don’t run the operations in the first place?
And as for BVLOS going mainstream, Amazon Prime Air has created a sense-and-avoid system for object detection, enabling operations without visual observation.
Amazon Prime Air drones can detect both static and moving objects and make autonomous decisions. An example is diverting an obstacle, such as another drone. This is a game changer for the future of drone deliveries.
But are delivery drones financially viable?
Currently, delivery companies such as: Wing (funded by Alphabet) are in a great space to innovate. They can incorporate the costs and growing pains across their entire infrastructure network.
Bash claims Amazon’s pull will accelerate industry-wide innovation: “The faster the new ones move, the better it is for us.”
But how economically feasible are single deliveries by a single drone? Walmart’s $3.99 drone delivery price seems vastly underpaid given the cost of drone infrastructure.
However, a recent survey of 1,000 US residents commissioned by drone mobility platform maker Auterion found that people don’t even want to pay that much for drone deliveries.
41% would be unwilling to pay an additional fee, while 41% up to $10. Only 18% were willing to pay more than $10. That’s a lot of people expecting a free ride to drop a burger or baby food out of the blue.
I also talked to hardware company A2Z Drone Delivery CEO Aaron Zhang. He believes that profitability is the elephant in the room for service providers and that every new technology is widely adopted:
“With lithium prices soaring in recent years, battery depreciation per delivery is certainly costing a significant portion of delivery service costs. Enabling operators to earn more per ride and improving the unit economy behind each delivery are priorities that we see for commercial expansion as an industry.”
Where are the subsidies for drones?
Notably, while drone deliveries are a huge win for the environment Strangely enough, compared to gas-guzzling vehicles, there are currently no environmental subsidies for the use of delivery drones, unlike electric cars, vans and bicycles.
Grants would go a long way in promoting R&D and mainstreaming drone deliveries.
What is clear is that most of the innovation in the residential drone delivery range is currently firmly in the US, with the exception of Wing’s restaurant deliveries in Australia and Manna grocery delivery in Balbriggan, County Dublin, and ANRA Technologies in india.
It will probably stay that way for a while. As Bash points out, “In the US, you have over 82 million backyards.”