Earlier this month, two giants in the drone delivery space—Zipline and Alphabet's Wing—each announced major upgrades to their service capabilities. Although their upgrade paths differ, both share the same goal: to scale up and reach more customers. Wing expects its drone delivery network to be able to handlemillions of deliveriesby mid-2024; Zipline, meanwhile, plans to achieveannual flight volumes exceeding those of most airlines by 2025。

However, achieving these goals requires more than just substantial investment—Amazon's experience serves as a cautionary tale. Amazon reportedly encounteredsafety challengesandlimited delivery operationsin its drone delivery efforts. Experts point out that companies need to lower operating costs by maximizing network efficiency while winning support from regulators and consumers; otherwise, drone technology will struggle to fulfill its advertised potential and become as ubiquitous as delivery vans in communities.

Increasing density and adjusting regulations to cut costs

In the last-mile delivery space, operators are working to increase density—for example, having couriers complete as many deliveries as possible on a single route to spread out operating costs. Although drones are typically limited by light payloads, networks can build their own "density advantage" by ensuring the fleet stays in constant operation, performing pickups and drop-offs as frequently as possible, thereby maintaining the sustainability of the business model.

"The worst-case scenario is having vehicles—whether drones or trucks—sit idle," said James Campbell, professor of supply chain and analytics at the University of Missouri–St. Louis. "The most sensible approach is to achieve massive scale, keeping drones flying continuously to spread fixed facility costs across a large number of drones and a large number of delivery tasks."

While delivery density is a key factor, it is not the only way to reduce operating costs. Eric Peck, CEO of drone logistics platform Swoop Aero, noted in an email that designing faster drones can respond to demand more quickly, providing higher-value services to customers, which in turn translates into more substantial profits. Additionally, expanding delivery range can help unlock new business lines, such as maritime logistics.

Peck also mentioned that having one pilot monitor multiple aircraft simultaneously will help operators maximize returns on network investment. A McKinsey reportpublished in January this yearcorroborates this view: under current pilot restrictions, drone delivery struggles to compete with other last-mile transportation methods on operating costs. The report shows that with one person monitoring a single drone, the cost per package delivery is about $13.50; if one operator can manage 20 drones simultaneously, the cost per delivery can plummet to about $1.80.

In the United States,a waiver is requiredfor one remote pilot to operate multiple small drones, and operators also need certification for beyond-visual-line-of-sight deliveries. For DroneUp, which is helping Walmart advance itsgoal of one million drone deliveries per year, the regulatory restriction of flying within visual line of sight limits its delivery radius to about two miles. Breaking through this limit holds enormous potential—DroneUp COO Anthony Vittone noted that 90% of the U.S. population lives within ten miles of a Walmart.

"For every additional mile of delivery radius, the number of reachable households triples or even quadruples," Vittone said.

Consumer acceptance and habits need to evolve in tandem

As delivery activities increase, companies also need to address concerns from the communities where they operate. Vittone said some potential customers may have unknown fears about drone delivery, which is common in the rollout of new technologies. To reduce uncertainty, DroneUp employees are on-site at Walmart stores to answer public questions and conduct demonstration activities.

Drone companies also need to consider potential disruptions to the public from their operations. For example, Wing has facednoisecomplaintsin Australia. In an email response to Supply Chain Dive, the company said that engaging with communities, answering questions, and gathering feedback before launching new services is a top priority.

"In fact, drone delivery can bring significant benefits—reducing traffic congestion, lowering emissions, expanding opportunities for businesses, and providing greater convenience for consumers—and these advantages become apparent once the service is deployed," Wing said.

If companies can win public support, the picture of drones disrupting traditional last-mile delivery becomes clear. Their speed advantage is particularly prominent—they can bypass ground traffic to reach customers directly. But Campbell questions what products, besides food and emergency medicines, need to be delivered within 15 to 30 minutes. Consumer behavior may need to shift, much like when FedEx introduced express package services or Amazon accelerated online order deliveries.

For drone delivery companies to achieve that disruptive, game-changing status, they must first significantly expand their coverage and capabilities. Based on recent announcements, that moment may arrive sooner than expected.

"Few things in this field happen before someone predicts them, but I feel more optimistic now than in the past—it's finally coming," Campbell said.

Editor's note: This article first appeared in our Logistics Weekly newsletter. You cansubscribe here。