"Delivery Drone Crashes Leading to Wildfire: Why Drone Delivery Hasn't Expanded Yet [Next.Jjin]"

Drone used in Amazon's 'Prime Air' service (Photo by Amazon)

[Asia Economy Reporter Jeong Hyunjin] "The promise of drone delivery often felt like science fiction. We have spent nearly 10 years working to make it a reality."

Amazon announced on the 13th (local time) that it will launch its drone delivery service 'Prime Air' in the United States starting at the end of this year. It has been almost 10 years since Amazon founder Jeff Bezos appeared on a broadcast in 2013 and declared that customers would be able to receive their orders within 30 minutes via drone delivery after pressing the purchase button. At that time, Bezos predicted drone delivery would be introduced within 4 to 5 years, but it has been much delayed. Bloomberg reported in April that Amazon has invested $2 billion (about 2.6 trillion KRW) in this business alone.

The competition in drone delivery is becoming increasingly fierce. In the U.S., not only Amazon but also Wing, a Google subsidiary, started drone deliveries in April. Walmart also announced an expansion of its drone delivery service last month. Active experiments for adoption are taking place not only in the U.S. but also in Asia-Pacific countries such as China and India. Global consulting firm McKinsey forecasted that more than 2,000 drone deliveries are made daily worldwide, and the number of drone deliveries, which was less than 500,000 last year, is expected to reach 1.5 million this year.

But why is the era of drones delivering goods arriving more slowly than expected? Considering the influence of companies like Amazon and Walmart, one might expect to easily see drones delivering on the streets by now, but they are surprisingly scarce. Although global companies have announced the introduction of drone delivery, the delivery range is limited and the timing seems delayed. Today on 'Next.Jjin,' we will take a closer look at the reasons.

1) Even Wildfires Occurred... Safety Issues Are Inevitable

The biggest obstacle to introducing drone delivery is safety issues. It is not easy to overcome regulatory hurdles due to safety concerns. If a drone delivering goods falls to the ground, the package or the drone itself could injure passersby or cause property damage to houses or cars. When there is wind or rain, drones must safely avoid obstacles such as trees or power lines while moving forward. To use drones for business, devices must be reliably designed to handle such situations without problems, and this process has taken a long time.

In fact, Amazon has experienced several accidents involving delivery drones crashing. In March, U.S. economic media Business Insider reported that Amazon's prototype delivery drones had at least eight crashes over 13 months. One of these incidents was a test flight last summer in Oregon, where a drone crash caused a wildfire, prompting firefighters to respond to the scene. Device malfunctions such as propeller issues or motor shutdowns have frequently occurred, leading to multiple warnings from regulatory authorities.

Amazon stated that it is consulting with the main regulatory authority, the U.S. Federal Aviation Administration (FAA), regarding the launch of the business. Walmart and Google's Wing have also clearly stated that they have received FAA approval for their drone delivery services. McKinsey pointed out, "The regulatory environment ultimately determines the scale and scope of drone delivery," adding, "Regulations decide operational matters including geographic areas, airspace, operating hours, and environmental conditions necessary for flight." In conclusion, these regulations are analyzed as the key factors determining the expansion and spread of drone delivery.

2) Delivery Costs Are 20 Times Higher Than Now... Must Be Realistic

Costs must also be considered. Drone delivery essentially replaces human labor with robots and machines, aiming to reduce labor costs, build efficient systems, and increase delivery speed simultaneously. However, if delivery costs are high, practical adoption will be difficult.

Business Insider reported in April, citing internal Amazon documents, that the cost of drone delivery is expected to reach $63 per delivery by 2025. This cost estimate is based on the goal of delivering 1 million packages annually, so if the number of deliveries decreases, costs will increase. Considering that the current delivery cost per Prime Air order approaches $500, it is expected to decrease significantly, but the cost of using traditional delivery services is around $4 to $5 per delivery, so the gap is enormous.

[Image source=Reuters Yonhap News]

Efforts to solve these cost issues are ongoing. Amazon reportedly stated in internal documents that it plans to address cost problems by expanding the range of delivery products and regions and lowering the price of drones themselves. Last month, Walmart announced plans to use drones for other purposes to offset costs, such as selling photos taken by drones to local governments or regional business stakeholders like construction and real estate companies.

"Drone delivery is still in its early stages." On the 13th, when Amazon announced the service launch, U.S. marketing research firm eMarketer evaluated it this way, citing safety issues and delivery costs. To move beyond the technology development phase to widespread adoption, regulatory and cost barriers must be overcome. Whether a new world where drones fly across the skies of the U.S., Korea, and around the world will come depends on solving these issues as companies work with regulators to find solutions.

Editor's Note [Next.Jjin] is a column that conveys news about major companies' future preparations, meaning 'looking ahead to the real next of business.' We will uncover and explain both prominent big issues and hidden but important small issues in an easy-to-understand way.