Operations
14 June 2022
Amazon Prime Air moves into launch sequence
The drone delivery service is debuting in Lockeford, California, later this year.

An Amazon Prime Air drone. (Courtesy photo)
The drone delivery service is debuting in Lockeford, California, later this year.
An Amazon Prime Air drone. (Courtesy photo)
Prime Air has its first landing spot.
Amazon’s drone delivery service is planning to start making deliveries in Lockeford, California, later this year, marking the first customer deliveries for the program.
Residents will be able to sign up for a free drone delivery service, and select from Prime Air items on Amazon. The drone will arrive at a backyard, hover at a “safe height,” and then release a package.
The company said it is working with the Federal Aviation Administration (FAA) and local officials on obtaining permission for the service.
Amazon’s announcement comes amid a flurry of activity in the ecommerce drone delivery space. In recent weeks, Walmart announced plans to expand its drone service to 34 sites in six states. Meanwhile, Alphabet’s Wing service is delivering Walgreens items in four suburbs of Dallas. Unilever has a partnership with Flytrex to deliver ice cream by drone this summer in North Carolina and Texas, too.
Amazon planted the earliest flag for drone delivery in 2013, when then-CEO Jeff Bezos famously appeared on 60 Minutes to make a surprise announcement about the Prime Air program’s ambitions. But the company has since struggled to get the drone service off the ground amid delays and crashes.
With its launch now, Amazon is looking to demonstrate that it is best positioned.
With the announcement of Prime Air’s debut in Lockeford, Amazon offered a glimpse at its development through the years, including a slideshow of some of the more than two dozen prototypes it has developed that nodded to the many iterations.
It also provided a look at how it plans to stand out. Amazon said its technology is designed to automatically “sense-and-avoid” potential hazards. This is distinct from drone delivery that requires an observer to visually observe a route. From the description:
We designed our sense-and-avoid system for two main scenarios: to be safe when in transit, and to be safe when approaching the ground. When flying to the delivery location, the drones need to be able to identify static and moving obstacles. Our algorithms use a diverse suite of technologies for object detection. Using this system, our drone can identify a static object in its path, like a chimney. It can also detect moving objects on the horizon, like other aircraft, even when it’s hard for people to see them. If obstacles are identified, our drone will automatically change course to safely avoid them. As our drone descends to deliver the package into a customer’s backyard, the drone ensures that there’s a small area around the delivery location that’s clear of any people, animals, or other obstacles.
The program will need to be cleared for takeoff by regulators, and Amazon said it will work with federal and and local officials. In 2020, Amazon received a Federal Aviation Administration air carrier certificate for Prime Air.
Along with a leadership role into the future of airborne, autonomous technology, the prize of a successful drone delivery system is the ability to provide the fast (read: less than one hour) delivery that customers want, while doing so without sending human delivery drivers.
Going first on a new technology can bring the spotlight that’s sought by those who want to be seen as innovators, but those bright lights can get hotter if the results don't come. Meanwhile, when others make their own moves, it can appear that they've pulled into the lead.
Famously averse to acknowledging competitors, Amazon tries to be impervious to this. It is known for giving technologies time to develop. It has led to plenty of success that put it in the driver's seat of US ecommerce. But some developments didn’t ever see the light, such as the company’s ill-fated Fire Phone, which failed on launch. Others, like the company’s grocery business, have gone through a series of pivots as the company seeks to find a breakthrough.
Over nearly a decade, the drone program has had a unique place in this pantheon. The 60 Minutes appearance instantly brought it into the public consciousness. Simultaneously, it has yet to be used by the public to allow consumers to deliver a verdict.
The stakes for a potential launch suddenly seem higher now. Amazon is facing pressure over rising delivery driver crashes and labor unions in its logistics facilities, who were successful in organizing a fulfillment center in New York. It is also seeking to get its consumer business back to growth after reporting a quarterly loss and admitting it overbuilt logistics facilities. Meanwhile, the CEO of its consumer business is departing. As underscored by its own drone expansion, Walmart is rolling out big ecommerce upgrades with the kind of organizational foresight and technology combination that’s typically seen with Amazon. Perhaps those are leading the company to act more quickly. Stories from Bloomberg and Business Insider earlier this year depicted a program that was struggling to get off the ground. Monday’s announcement, however, is a sign that it is closer to the light of day than the public thought.
Whether it is successful in a community remains to be seen. Amazon said residents will help in offering feedback. The company said it will also be "creating new jobs, building partnerships with local organizations and helping reduce carbon emissions."
Though it didn't provide details on specific local initiatives , it's clear the groundwork is being laid. In our recent roundup of the drone delivery launches, we concluded the piece by writing of Amazon’s drone delivery ambitions, “Down the road, there may be another big unveiling still to come.”
With the stage set in Lockeford, it looks like that could arrive before the year is out.
The figure underscores the importance of the marketplace to Amazon's business.
When it comes to selling physical goods through online channels, the Amazon model is dominant.
The company’s commerce business has four distinct components: A marketplace with a constantly expanding assortment of goods driven by third-party sellers, an advertising network that helps sellers stand out, a fulfillment network that delivers items quickly and conveniently, and a membership program that builds loyalty, while connecting shoppers to the other parts of Amazon’s consumer ecosystem.
Each of these elements are mutually-reinforcing. At this point, it would be difficult to grow one without another. A third-party seller on the marketplace likely buys advertising to stand out in a sea of brands, and uses Fulfillment by Amazon to store and ship inventory in part because it’s the most convenient way to access Prime customers.
Yet these parts also exist as their own lines of business that have helped Amazon unlock new avenues for growth beyond the rote sale of goods. Services provided to third-party sellers, Amazon Ads, FBA and Prime all generate their own revenue, and most of these are growing rapidly.
Just how important are they to Amazon?
The company offered some details on one of these areas in a new report this week: Third-party sellers. These independent sellers that list, manage and ship their own products are distinct from first-party sellers, which effectively sell items to Amazon and leave the ecommerce company responsible for the sale to the consumer. As Amazon points out, most third-party sellers are small and medium-sized businesses. First-party sellers tend to be the larger name brands.
As it turns out, third party sellers are very important to Amazon. Key stats from the report:
Independent sellers account for 60% of sales in Amazon’s store.
U.S. sellers sold more than 4.1 billion products—an average of 7,800 every minute. These sellers averaged more than $230,000 in sales in Amazon’s store.
Brand owners in the U.S. grew sales over 20% year over year in Amazon’s store.
Amazon sellers are based in all 50 states.
Over 260 million products were exported globally by U.S.-based sellers.
The results in part underscore how much energy Amazon has put toward growing the marketplace, and the uptake in sellers that has arrived as a result.
“Amazon invests billions of dollars annually to provide entrepreneurs with a constantly improving set of valuable tools and resources to help them gain access to capital, quickly launch in our store, build their brands, and rapidly scale and reach more customers,” said Dharmesh Mehta, vice president of Worldwide Selling Partner Services at Amazon, in a statement. “Amazon is committed to the success of small businesses, and we are excited to continue innovating on their behalf and help them grow into thriving success stories.”
Make no mistake: There is also a massive benefit to Amazon’s business. In the first quarter of 2023, third-party seller services generated $30 billion, and grew 20%. Compare that to AWS, which is typically seen as Amazon’s big profit driver, and you’ll find that the cloud division generated about $21 billion while realizing 16% growth.
While third-party seller services aren’t always running ahead of AWS, the fact that they are growing in areas close to each other is a sign of how much opportunity lies in the marketplace for Amazon. Factor in that Amazon’s $9.5 billion (Q1) advertising business is also tied in part to the marketplace, and it’s clear that the impact extends beyond a single budget line.
Amazon’s success with third-party sellers is a big part of the reason why the marketplace model is being widely applied across commerce. Walmart is doubling down on growing third-party sellers on its marketplace as it follows an ecommerce playbook that has similar components of Amazon, and Macy’s opened its ecommerce business to third-party sellers last year. Shein recently brought its own marketplace to the U.S., and the fast fashion platform is using it as a means to expand the number of categories.
While Amazon will likely to continue to couch its communications about third-party sellers in the language of support for small businesses, it is a major reason that the company has been able to grow to the giant it has become, and remain there. With the growth of ecommerce and the rise of retail media, plenty of others in commerce will continue to apply the model, as well.
For a bit more info on Amazon, the company also shared the below rankings in the report on third-party sellers:
The most-shopped categories from third-party sellers:
The five states with the most third-party sellers: