After suffering a series of major mishaps and unfulfilled promises over the past decade and change, it looks like Amazon’s drone delivery service will finally make its U.S. debut in 2022.
Amazon (NASDAQ: AMZN) on Monday announced that some 3,500 residents in the town of Lockeford, California, would be the first eligible customers to receive packages delivered by drone within 30 minutes — free of charge. The service is slated to begin later this year, though Amazon did not specify an exact month or launch date.
In a blog post detailing the launch, Amazon explained that orders would be air-dropped directly into customers’ backyards via drone, much like competitor Flytrex. The aircraft will fly to the customer’s residence, descend into the airspace over the backyard and hover at a safe height before releasing the package, the post described.
Lockeford has a community of about 3,500 people, but only Amazon Prime members in the area will be able to use the service.
“Lockeford has historic links to the aviation industry. The community boasts one of the early pioneers of aviation — Weldon B. Cooke, who built and flew … planes in the early 1900s — as a former resident,” Amazon said in the blog post. “Now, over a century later, residents will get the opportunity to sign up for free drone delivery on thousands of everyday items.”
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The post also noted that Prime Air is working with the FAA to obtain the necessary certifications for the new service. As it stands, it’s one of just three drone delivery companies — the others being Alphabet’s (NASDAQ: GOOGL) Wing and UPS (NYSE: UPS) Flight Forward — to receive a FAA Part 135 air carrier certificate, which enables drone deliveries beyond the operator’s visual line of sight.
In order to launch in Lockeford, Amazon will also need to prove to the FAA that its proposed operation is in line with the National Environmental Policy Act. That policy sets out rules for companies to evaluate the environmental and social impacts of their businesses. Still, even after all that, local regulators in Lockeford will need to sign off on the proposed service as well.
Despite the remaining hurdles, the proposed Lockeford pilot is a huge milestone for Prime Air. The firm has been marred by mishaps for several tumultuous years, including employee turnover north of 70% and technical malfunctions that resulted in five test crashes over a four-month stretch.
But Amazon may have finally started ironing out those flaws. In the blog post announcing the Lockeford pilot, the company touted its new sense-and-avoid system, which it said “will enable operations without visual observers and allow our drone to operate at greater distances while safely and reliably avoiding other aircraft, people, pets and obstacles.”
It remains to be seen whether Amazon has truly perfected its drone tech. But the new system is undeniably an upgrade over the tech that resulted in one of its drones crashing and igniting a 25-acre brush fire.
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With each error pushing Amazon further behind its rivals, the pressure to deliver has never been greater. Wing and UPS Flight Forward, the other two recipients of the FAA’s Part 135 air carrier certificate, both launched expansive pilots during the pandemic — Wing in the Dallas-Fort Worth metro area and Flight Forward in North Carolina. Wing is also looking to expand into Virginia.
Meanwhile, Walmart (NYSE: WMT), which doesn’t have a drone delivery arm but partners with drone delivery provider DroneUp, has been operating two drone hubs in Arkansas since last year. At the end of May, the retailer said it would add six states and around 4 million people to its drone delivery network this year.
But even outside of those big players, the competition is fierce. Smaller U.S. drone delivery startups like Flytrex, Zipline and Flirtey have all launched dedicated pilots of their services. And that still doesn’t account for foreign companies working to capture the U.S. drone delivery market, like Wingcopter, Matternet or Manna.
To compete, Amazon will need to ensure that its deliveries are not only safe but cheap. By its own estimates, delivering with Prime Air drones will cost Amazon about $65 per package in 2025. According to Brian Fitzgerald, managing director at Wells Fargo Securities, it costs the company between $4.50 and $5.50 to ship a package through a third-party delivery provider.
Experts disagree on whether drone delivery is cheaper than ground-based services. A Gartner analyst said that using drones rather than delivery vans lowers operational costs by at least 70% because they eliminate the costs that arise from traffic.
A report from Martin Luther University in Germany, however, found that high wind speeds could result in drones using up to 10 times as much energy as electric delivery vehicles.
Still, Amazon plans to push on. The blog post noted that Prime customers in Lockeford would be “among the first” to use the new service, implying that more locations will follow. Until then, Amazon’s operations in Lockeford will likely come under intense scrutiny as it tries to rectify Prime Air’s past mistakes.
Amazon did not immediately respond to Modern Shipper’s request for comment.
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