Alphabet’s Drones Take Flight in Texas

Tech giant Alphabet’s (GOOGL) ambitious drone delivery service unit, Wing, took its first flight in Texas, the U.S. on April 7. Wing is successfully running operations in Australia and Finland, with almost 200,000 commercial drone deliveries carried out in Australia.

The first round of commercial deliveries will be launched in the Dallas-Fort Worth Metroplex, with “service to tens of thousands of suburban homes in the City of Frisco and Town of Little Elm,” CEO Adam Woodworth said.

Wing is going to start delivering health and wellness products, ice cream, prescription pet medications, and first aid kits. It has tie-ups with Walgreens Boots Alliance (WBA), Blue Bell Creameries, easyvet, and Texas Health for the same.

Wing has placed its drones at a local Walgreens store parking area. In the U.S. this will be Wing’s first-of-a-kind delivery service directly operated by a partner. Customers will be able to order from 100 items, which include over-the-counter medicines and everyday essentials from Walgreens. Wing is positive about this third-party delivery model, which will enable businesses to reach their customers more efficiently compared to road delivery.

Moreover, for deliveries of other items, Wing is hosting a mixed-use development in Frisco, Texas, that will be operated by Wing employees.

However, drones come with their limitations. Wing’s drones have a speed of 65 miles per hour and can carry up to 3.3 pounds of items, with a range of around 12 miles per trip. Wing claims that drones can typically deliver goods within ten minutes.

Wing drones weigh approximately 10 pounds and are four feet long, with a wingspan of over three feet. In a typical drone delivery, the hovering drone drops down delivery lines to the person standing in the holding area, who then attaches the goods to the line. The line is then reeled up by the drone, which the flies off to the destination for delivery. The parcel is dropped off by reeling it down the line and is unhooked automatically.

Although the drones are autonomous, meaning they navigate the route themselves, they are overseen by human pilots. For Wing, the pilots overseeing the Texas operations are based in California and Texas.

Wing has received an air carrier certification from the Federal Aviation Administration, and has received permission to operate in Frisco and Little Elm. The company has also applied for design and component parts approval with the FAA to scale its operations. After successfully launching operations in Texas, Wing aims to expand its services in other parts of the U.S.

Attractiveness of Delivery Drones Market

According to a Mordor Intelligence report, the global delivery drone market is set to witness a compound annual growth rate (CAGR) of 12% between 2022 and 2027, with North America being the largest market and Asia Pacific being the fastest-growing market.

Major players include Deutsche Post DHL Group, Amazon (AMZN), United Parcel Service (UPS), and Zipline. Other major players in healthcare, logistics, and food delivery are entering the market, attracted by its effectiveness and zero-emission qualities.

Similarly, a Fortune Business Insights report showcases that the drone package delivery market in North America is set to reach $31.2 billion by 2028, reflecting a CAGR of 53.9% between 2021 and 2028.

The COVID-19 pandemic boosted the appeal of the market, with companies making contactless deliveries of medical tools, medicines, and vaccines. Furthermore, companies are making heavy investments in the segment, attracted by the sheer size of the market and its efficiency with last-mile delivery. The only challenge remains that drones have weight and distance limitations, and companies are focused on innovating ways to increase both with newer models and regulations in place.

Alphabet Stock Prediction

With 30 unanimous Buys, the Wall Street community has awarded GOOGL stock a Strong Buy consensus rating. The average Alphabet price target of $3,490 implies 28.4% upside potential to current levels. Its shares have lost 6.3% year-to-date amid broader tech sell-off, and gained 20.8% over the past year.

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