If you live in Fayetteville, North Carolina, you can now have Starbucks delivered — not quite in your backyard yet, but soon perhaps.
An Israeli drone company, Flytrex, has been testing drone delivery in North Carolina, delivering items from restaurants in the Holly Springs Towne Center to a pickup location within a five-minute drone flight. Starbucks, Dairy Queen Blizzards, pastries and light meals are among the menu items.
“It’s more gentle than most human couriers,” Yariv Bash, co-founder and CEO of Flytrex, told Modern Shipper.
Flytrex is among the growing number of drone providers and companies that are hoping to cash in on a delivery market that is expected to reach more than $6 billion by 2026. The Federal Aviation Administration (FAA) in late December released new regulations that will expand the opportunity for drone delivery tests.
The FAA rules require unmanned aircraft systems (UAS) to broadcast identification or location information and allow operators of small drones to fly over people and vehicles, and at night under certain conditions. In January, the FAA approved a waiver request by American Robotics Inc. that allows the company to fly drones beyond the visual line of sight of operators, something that is not currently allowed under existing regulations.
L.E.K. Consulting predicts that drones will make 30% of same-day package deliveries by 2040. To get there, drone operators need to extend flight distances beyond sight lines. Bash noted scenarios in which local grocers can benefit from drone delivery. In fact, he believes that drone grocery delivery is easier than package delivery. Retailers, Bash noted, are still struggling with inventory transparency while grocers turn goods over quicker so items are usually in stock, making on-demand delivery more viable.
“The drone was designed from day one for retail and food delivery applications,” Bash said. “If I told FedEx (NYSE: FDX) to deliver a pizza to your house, it sounds very weird, even though FedEx delivers to your house. This was purpose-built for these types of applications.”
The competition in the space is fierce.
Walmart (NYSE: WMT) will begin a drone delivery pilot with customers along the Arkansas and Missouri state line this summer in cooperation with drone provider Zipline International. Air Canada (TSX: AC) is supporting e-commerce drone deliveries in Canada; Japan Airlines is also involved in a drone delivery project; and Astral Aviation in Kenya has set up a drone division. Amazon (NASDAQ: AMZN) has been testing drone delivery, as is UPS (NYSE: UPS).
Even truck manufacturer Workhorse Group (NASDAQ: WKHS) is trying to benefit from drones. Its electric trucks are being designed with a drone atop the vehicle, allowing a delivery driver to hand-deliver packages while the drone delivers additional items.
Bash sees a few obstacles to drone deliveries becoming an everyday occurrence, but none bigger than public acceptance. In many ways, drone deliveries face similar challenges to autonomous vehicles.
“I think it’s an easier argument with drones,” Bash said. “A decade ago, if you said to someone the word drone, they would have thought a military drone in Afghanistan shooting hellfire [missiles]. Today, if you think about drones, it’s the annoying 20-year-old neighbor … whizzing one by your head. The public meaning of [what a drone is] will change again as we see more and more delivery drones. The first few times someone gets a delivery by a drone, they are outside taking pictures of the delivery. By the third or fourth time, they just go outside and pick up their package.”
Flytrex’s drone doesn’t land to deliver its cargo, which can weigh up to 6.6 pounds. Instead it lowers it to the ground on a wire, releases it and flies on its way.
“We’re going through the same process with the FAA that the manned airplanes go through,” Bash said, citing the strong safety data that must be supplied. “It’s the same kind of safety.”
While other drone companies are targeting different niches, Flytrex is focused on suburban neighborhoods, which rarely change much so the company can easily map flight plans.
“We’re meant to sell to the suburbs and private houses,” he said. “You don’t see too many [topography] changes in the suburbs — nobody is erecting skyscrapers.
“We believe that drone deliveries will enable you to enjoy that ubiquitous kind of instant delivery,” Bash added. “If you are making dinner and you need tomatoes, you can buy them now and have them delivered quickly.”
Flytrex is working with retailers to make these deliveries happen. Bash said during the current pilots, a Flytrex employee goes to the stores in the Holly Springs shopping center when orders are placed to collect the items and load them onto the drone for delivery. Except for integrating the Flytrex system with the retailer’s order system – similar to Uber Eats – the merchant’s involvement is simply in fulfilling the order. Customers buying from participating retailers will see “drone delivery” as a delivery option at checkout.
“We want to be the delivery service, not the marketplace,” Bash said, noting that acceptance could happen quickly.
“Once Amazon starts offering drone deliveries, you will have to offer similar services,” he said, noting that retailers that are “not offering that option in the next few years will be out of business.”
To keep costs down, Bash said an operator would manage multiple drones at once from a centralized location. That requires additional approvals from the FAA. Flytrex is hopeful approvals will be forthcoming and it can expand its services in the U.S. later this year.