The world has a very bad and serious case of cooties – and no one wants to catch it. That means many people have turned into hermits, avoiding contact at all costs. But this is the 21st century, so today’s recluse needs stuff, lots and lots of stuff. Naturally, e-commerce continues to soar (as Amazon recently blew past $1.6 trillion in market cap) during the pandemic and big box stores continue to slump into oblivion. While the skies and streets are not yet crowded with drones ferrying food and merchandise, the time truly is near when a contactless drone delivery service will be de rigueur in a world where the air fist bump will replace the handshake.
- 1 Putting the World on Autopilot
- 2 Riding Over Regulatory Rules
- 3 On a Wing and a Prime Subscription
- 4 Courier Companies Go Contactless
- 5 Walmart Jumps into the Drone Delivery
- 6 Drone Delivery Startups
- 7 Conclusion
Putting the World on Autopilot
Some of you are probably saying that you’ve heard it all before, but to paraphrase a platitude: technological innovation and adoption are often born out of necessity. From the development of radar and blood transfusions to the bloody success of the atomic bomb, World War II is an example of rapid advancements in technology across a wide range of industries and disciplines. Zoom (ZM) didn’t invent visual communication and collaboration by video, but the mass evacuation of offices has made it an essential service. More closely related to this article: Healthcare is another obvious industry that could stand a social distancing boost, and technologies ranging from medical robots in smart hospitals to virtual assistants and remote monitoring are quickly gaining traction.
And while we await the arrival of autonomous taxis without pesky, pandemic-stricken humans, commercial drone delivery by air and ground is coming to a neighborhood near you soon.
Riding Over Regulatory Rules
A few quick notes before we dive into the current drone delivery landscape. In this article, we cover drones that travel by both air and land, though the latter usually look like droids out of Star Wars and are often referred to generically as robots. All of these drones, as the marketing goes, are meant to fill the “last mile” delivery gap – though the use cases are certainly broader than delivering Amazon packages to your front door. Local and national regulations are probably the biggest hurdles, rather than the technology itself, especially when it comes to autonomous drones flying beyond visual line of sight with no drone operator to be seen. However, a few companies have already gotten the green light from the Federal Aviation Administration (FAA) for more advanced operations.
So far, only three companies have a golden ticket to launch delivery drones beyond visual line of sight (BVLOS), better known as Part 135 certification, in the United States. Alphabet-owned Wing and UPS (UPS) were both certified last year, and Amazon (AMZN) joined the 135 club earlier this summer.
On a Wing and a Prime Subscription
Wing is now making (very limited) deliveries in Australia, Finland, and the United States. In fact, only residents in Canberra and Logan in Australia, Helsinki in Finland, and Christiansburg, Virginia can order coffee or cakes using the Wing app. The technology has been tested across more than 100,000 flights, and Wing’s drone boasts plenty of redundancies, including extra motors and batteries, as well as multiple navigation systems:
Wing has partnerships with both FedEx (FDX) and Walgreens (WBA), among others, for its Virginia-based pilot program. Meanwhile, Amazon is moving forward cautiously, with no grand plans to scale drone delivery beyond its ongoing testing and development. Last year, the e-commerce king debuted a new Prime Air drone that can haul packages under five pounds up to 15 miles away within a half-hour.
Courier Companies Go Contactless
FedEx competitor UPS has full Part 135 certification for its Flight Forward Drone Delivery airline. The backbone of the UPS operation is the M2 drone from Silicon Valley-based startup Matternet, which has now raised about $31 million in funding. In 2019, M2 drones completed more than 1,850 deliveries of lab samples at a medical campus in Raleigh, North Carolina, with the program expanding further this year. In Florida, UPS and CVS are teaming up to airlift prescription meds to retirees in that senior citizen Tinder box known as The Villages for contactless drone deliveries because of COVID-19 concerns. UPS announced earlier this year it would collaborate with German drone-maker Wingcopter to “develop the next generation of package delivery drones for a variety of use cases in the United States and internationally.”
Courier companies outside the United States are also investing heavily in parcel delivery using drones. Remember EHang (EH), the Chinese autonomous vehicle manufacturer that went public in the United States last year? International delivery service provider DHL is working with EHang on what they’re calling “a fully automated and intelligent smart drone delivery solution to tackle the last-mile delivery challenges in the urban areas of China.” The EHang Falcon drone sports eight propellers on four arms and is capable of carrying about 10 pounds. It is supported by a fully autonomous station for loading and unloading shipments.
Walmart Jumps into the Drone Delivery
The brick-and-mortar retail juggernaut Walmart (WMT) has shown its willingness to become a technology company by embracing artificial intelligence and robotics. It announced two deals just last month with well-known drone delivery startups Flytrex and Zipline. We first covered Israeli startup Flytrex in 2017, and the company has now raised $11 million for its drones, which while not waterproof, can carry up to eight hamburgers, according to the company.
A company that first crossed our radar in 2016, Zipline has made a name for itself by delivering medical supplies across Africa. The San Francisco area startup has also raised a ton of cash at $233 million, including a $120 million Series D last year that earned it a valuation of about $1.2 billion. Now Zipline will begin moving healthcare products to Walmart customers in Arkansas, while Flytrex will work in North Carolina delivering groceries and household essentials.
Walmart isn’t just attacking drone delivery by air. It also teamed up with another startup unicorn out of Silicon Valley called Nuro, which has raised about $1 billion. Nuro’s custom-built RS is an electric-powered delivery vehicle that carries only products with no onboard driver or passengers. (Walmart is also working with yet another Silicon Valley startup, Gatik, on autonomous box trucks to cover “middle mile” logistics. Founded in 2017, Gatik raised $4.5 million in a Seed round last year.)
Drone Delivery Startups
Not every drone delivery startup is working for Walmart. In fact, plenty of companies are raising money and finding customers for a number of use cases.
Heavy Lift Drone Delivery
Eight hamburgers (fully loaded, we hope) might sound like quite a lot of cargo for a drone with toy-sized propellers, but bigger aerial drones called unmanned aerial vehicles (UAVs) aim to do the real heavy lifting. Here are a couple of UAV companies we’ve covered before that have recently taken funding.
Founded in 2015, San Francisco-based Volansi just landed $50 million last month to bring total funding to about $75 million. The startup serves commercial customers in construction, oil and gas, mining, and medical industries. Its bigger AUV, the VOLY M20, can haul up to 20 pounds with a cruising speed of more than 75mph. It’s reportedly developing an even more robust platform – an AUV that can travel 500 miles at speeds of 200mph. However, the current workhorse model, the VOLY C10, can lift 10 pounds across 50 miles.
Also based in San Francisco and founded just a year later, Elroy Air has raised a total of $16 million following a $6.8 million venture round back in March. Elroy Air is developing an even bigger AUV that can (maybe someday) haul up to 500 pounds with a 300-mile range thanks to a hybrid electric powertrain. The Chaparral takes off and lands in copter mode but flies like a small aircraft, recharging its battery between destinations.
Drone Delivery Support Infrastructure.
Not every drone delivery startup is necessarily building the drones themselves. Some are focused on flight and navigation infrastructure.
Founded in 2017, Chicago-based Valqari is an early-stage company that has raised $2.1 million in Seed funds to develop a drone delivery system that serves as a landing site with six separate storage units to accommodate multiple drone deliveries or pickups. The unit is drone agnostic, allowing for a variety of delivery methods, including winched and hover-dropped packages. Standing more than seven feet tall, the station also maintains a digital chain of custody throughout the entire delivery process, which is completely automated.
Founded in 2016, DroneTerminus is a shoestring-funded drone startup out of Boca Raton, Florida that is developing a site awareness system that serves as the eyes on the ground during drone delivery and landing operations. The device has sensors that use a machine learning algorithm that can gather, analyze, and communicate actionable real-time data at a landing site. For instance, it can detect hazards including living things like a miniature pony that may be present during final descent and issue real-time commands to an autonomous drone.
Keeping Drone Delivery Grounded
While a lot of the media (and money) are focused on flying drones, plenty of last-mile delivery robots also take to the sidewalk or road like Nuro. Big industry players have taken notice, such as Caterpillar (CAT), which, this year, acquired San Francisco-based Marble and its autonomous drone delivery technology. As we previously noted, Caterpillar is investing heavily in autonomous trucking in industries like mining.
Probably the most famous ground delivery drone manufacturer is Starship Technologies, which has now raised more than $82 million, including a $40 million Series A last year that included names like Shasta Ventures and the Swiss postal service. Found in 2014 and based in San Francisco, Starship has developed a six-wheeled droid-like delivery drone that can carry up to 20 pounds of groceries within a four-mile radius while moving at pedestrian speeds. The robots use a combination of machine learning, artificial intelligence, and sensors to travel on sidewalks and navigate around obstacles, while its computer vision-based navigation helps it map its environment to the nearest inch. The urban-savvy drone can cross streets, climb curbs, travel at night, and operate in both rain and snow.
Not every ground delivery drone moves like a rolling stone. Oregon startup Agility Robotics, founded in 2015, just raised $20 million a few days ago to bring total funding to about $28.8 million for its line of bipedal robots. Its latest product is Digit, which can walk, run, and climb stairs – all while carrying a big box of goodies to your front door.
The only drawback is that Digit is headless, so it’s harder to kill when it becomes sentient and decides to deliver death to customers. It’s the price of progress.
There’s certainly been a world of progress in the drone delivery market since we visited this topic last year. While most services remain small-scale pilot projects, the need for contactless delivery systems in the Age of COVID-19 is driving broader adoption. It also doesn’t hurt that big retailers like Walmart (not to mention pizza chain Domino’s, among others) are highly interested in the technology. The big question is whether customers really need anything else aside from their pizzas and plasma delivered in 30 minutes or less.
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