At the time Amazon was looking at various avenues to distance itself from some postal services. They invested money in drone delivery and some jurisdictions have it. But in the end drone delivery just wasn’t as cost effective as parcel delivery by van. For most North American cities the travel distance of these drones just ended up being too long for the amount of items packed in each parcel.
Because it depended on the FAA allowing “beyond visual line of site” drone operations, which they have decided against, except by very specific and hard-to-obtain waivers. Without it, the operator has to follow along in a car to keep the drone in sight, which defeats the whole benefit of just the drone doing the delivery.
It was an attempt to boost market share by getting investors excited. It was never viable, either economically or socially (drones are very noisy and neighbors would bane drone delivery nearly immediately).
Drone deliver may work in special circumstances (getting antidotes to remote locations, for example) but were never viable for general delivery.
FAA regulations and economics. Delivery drones already work in countries like Rwanda, Ghana and Kenya from a company called Zipline. These countries are typically sparsely populated and to drive to these rural destinations takes days where a drone can deliver in 30 minutes.
In the US, a drone legally can not fly “out of site” of the person controlling the drone. Also the airspace in the US is much more busy and controlled (you would hate to have a 150 lbs drone crash with another plane). Right now regulators haven’t figured out how to fit the capabilities of these new drones into an already busy system.
I work for a company that is helping build the digital infrastructure for drone transportation.
It is a multifaceted problem that many companies are trying to solve. Regulation from the FAA is one of the major limiting factors. Besides the mechanical issues described in other comments, being unable to fly beyond visual line of site (bvlos) is highly problematic. You need a person flying/watching the drone for its entire journey. That makes the people to drone ratio impractical.
FAA is making regulatory changes to permit bvlos that coincide with mandating remote id.
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