2023 drone deliveries: Will other companies meet expectations amidst Amazon woes?

Amazon made headlines in 2013 when then-Chief Executive Jeff Bezos announced on 60 Minutes that it would deliver packages using drones. Ten years later, and Amazon’s delivery service is extremely limited. As tech writer Sean Hollister of The Verge described Amazon’s 2023 drone deliveries, “Amazon’s drone is effectively a five-year-old who needs to hold hands to cross the street.”

That review, or shall we say dunk, is in reference to the deliveries happening at Amazon delivery sites in College Station, Texas and Lockeford, California. That’s because, at the end of 2022, Amazon announced it had made the first deliveries from those two new sites, which its leadership refers to as “careful first steps that we will turn into giant leaps for (Amazon) customers over the next number of years.”

Alas, “careful first steps” might be the understatement of the year. According to reports released in February 2023 from both The Information and Business Insider, Amazon had served fewer than 10 households in its first month or so after the announcement. Meanwhile, it also laid off more than half the employees at those locations.

An Amazon spokesperson said that the layoffs would not impact its plans to continue drone deliveries in Lockeford and College Station, nor would it suppress expansion efforts.

But it’s not exactly encouraging to folks striving to be bullish on drone delivery. And many folks are very bullish on delivery drones. The Advanced Air Mobility (AAM) industry is set to grow to $20.8 billion by 2035 at a CAGR (compound annual growth rate) of 22.1%, according to the Advanced Air Mobility Report 2022-2035 from German analytics group Drone Industry Insights.

So if Amazon is at fewer than 10 deliveries in its first month, is that $20.8 billion figure realistic by 2035?

2023 drone deliveries: What Amazon’s competitors are up to

There certainly are other companies that are pulling major weight in terms of 2023 drone deliveries.  Zipline and Google-sibling Wing are considered the No. 1 and 2 biggest drone delivery companies in the world, respectively.

Other drone delivery companies that have Federal Aviation Administration approval include Matternet, which in December 2022 received the first-ever FAA Production Certificate for a delivery drone, making Matternet the first (and currently only) company able to produce certified delivery drones in the U.S.  And in early February 2023, Matternet was granted an FAA waiver allowing the company to operate up to 20 aircraft with one remote pilot at its test site in Pittsburg, California.  That 20:1 FAA waiver allows the drone to fly beyond the sight of the remote pilot and the visual observer , though it does require a visual observer to ensure the airspace is clear.

“The 20:1 waiver is an important step in the process of improving both Matternet’s level of automation and the economics of drone delivery,” according to a statement from Matternet. “While its recent FAA certifications have been hardware focused, this waiver shows the importance of its software and autonomous capabilities.”

Matternet and Zipline both have generally focused on carrying medical goods.

“They are proving to be transformative for under-developed countries like Rwanda, Ghana, Vanuatu, and soon India,” according to a statement from DII.

“However, the answer to the question, ‘Will my pizza soon come by drone?’ in most cases will for the foreseeable time be not likely,” according to DII. “Last-mile drone delivery is very complex, and other delivery scenarios (e.g. delivery to a small packaging station) are more likely, especially in densely populated city centers. Nevertheless, in the suburbs and rural areas, drones already deliver retail, food and medical supplies today.”

One of those companies really leaning into on-demand drone delivery company for food and retail is Flytrex. Flytrex is currently executing tens of thousands of food and retail drone deliveries per year, and it recently became the fifth company in the world approved to conduct drone deliveries under a Standard Part 135 Air Carrier Certification from the FAA.  It’s anticipating thousands more 2023 drone deliveries.

And Flytrex intentionally uses that to differentiate itself from the four other companies with Part 135 certification, touting itself as the “largest backyard drone delivery service in the U.S.” It’s been delivering menu items from Chili’s Grill & Bar and Maggiano’s Little Italy in Granbury, Texas. It’s shipped Charleys Philly Steaks via drone around Durham, North Carolina. And Flytrex temporarily partnered with ice cream giant Unilever (the company behind brands like Ben & Jerry’s, Breyers, Klondike, Magnum ice cream, and Popsicle) to run deliveries for 2022’s National Ice Cream Day.

Why does Amazon lag so far behind other drone delivery companies?

If Zipline, Wing, Matternet and Flytrex are seemingly seeing success, why does Amazon lag so far behind? With a roughly $1 trillion market cap, it’s behind only Google in terms of value (Google parent Alphabet has a roughly $1.21 trillion market cap). It’s certainly got seemingly more financial resources than, say, Flytrex, which has raised a relatively small $60 million across six funding rounds, or Matternet, which has raised an even-less $31 million.

Amazon has always been a bit slow to execute real drone deliveries. It was in December 2016 when Amazon  announced that it had made its first drone delivery to a customer. That drone delivery was a 4.7 pound package that flew for 13 minutes across two miles between an Amazon warehouse, over the English countryside, and to a landing pad placed in a customer’s yard.  The news was widely covered, with The New York Times calling it “a major step for drone delivery”, while other outlets touted how drone delivery “just became a reality.”

But in that whole ordeal, Amazon’s drone delivery service currently serviced only two customers. Over the next several months it would expand to merely dozens who live near the company’s U.K. warehouse.

That was in 2016 in England. In 2023 in the U.S., progress feels stagnant. A big reason why Amazon’s delivery drone “needs to hold hands to cross the street” is because Amazon does not currently have exemptions that competitors have.

Amazon did receive its FAA Part 135 air carrier certificate to operate drone deliveries from the FAA way back in 2020, but that certificate also came with a high degree of restrictions. According to a January 2023 letter from FAA Deputy Executive Director of Flight Standards Service Wesley Mooty and addressed to Amazon’s Sean Cassidy, the FAA only partially granted Amazon Prime Air’s petition for exemption of certain FAA rules. Among the rules Amazon must still abide by include:

• All operations must fly over airport property and contiguous parcels for which Amazon has pre-arranged exclusive use or access control.
• Operations over or within 250 ft. laterally of moving vehicles are prohibited.
• Sustained flight within 250 ft. laterally of roadways is prohibited.
• Operations over human beings and structures are prohibited.
• The must remain at least 100 feet laterally from any person or structure during all phases of flight.
• Transitions over roadways are prohibited except as provided in the FAA-approved Amazon Prime Air MK27, Concept of Operations.
• Operations are permitted only in sparsely populated areas.

With all those restrictions, the vision of flying drones from warehouses to homes is basically impossible.

But other industry experts still believe in drone delivery. An estimated 350 companies around the world have built a combined 600 concepts for delivering drones, according to DII. DII estimates 5% of those concepts are already in at least the test phase, which is the preliminary stage of the certification process.

And the biggest drone industry players are optimistic going forward about 2023 drone deliveries. Wing cited growth across three continents, which included a store-to-door operating model, which sees a small fleet of drones operate directly from existing retail locations including a shopping mall in Australia and a Walgreens pharmacy in Dallas. It brought on new partners including DoorDash, and it expanded operations, including a new delivery outpost in Ireland.

“If there is one clear trend that defines Wing’s progress in 2022, it’s that this is the year when we began to see what drone delivery at scale can really look like,” according to a statement from Wing.

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