The location, to be sure, is Iceland - hardly the most congested country in the world. Nevertheless, the drone technology company Flytrex has successfully deployed the craft in multiple deliveries within the city of Reykjavik.

That would seem like an ideal place to test the drone delivery concept, given Reykjavik’s population of only around 122,000. Partnering with AHA, Iceland’s largest e-commerce website, Flytrex officially launched the first on-demand drone delivery service in August.

The initiative is aimed at Reykjavik’s food and consumer-goods sectors. The goal, principals say, is to speed up delivery times, slash energy consumption and streamline logistics. “We’re making delivery as instant as ordering,” says Yariv Bash, Flytrex’s chief executive officer and co-founder.

Developers of the service had to face some of the same obstacles to drone delivery that have been erected in the U.S. by the Federal Aviation Administration. That includes a rule that drones can’t fly beyond the operator’s line of sight — an impossible requirement for viable commercial delivery services to meet. Bash says Flytrex and AHA obtained special permits from Icelandic authorities that exempted them from the rule, following “rigorous” testing.

As a result, he said, “I think we’re the first in the world in an urban environment to carry goods beyond line of sight.”

Far bigger entities than Flytrex and AHA — think Amazon.com and Google for a start — are racing to develop drone delivery services. Bash says Flytrex was able to leapfrog them because it didn’t set out to develop its own drone from scratch. Instead, it chose to modify existing models. In Iceland, it’s deploying the Matrice 600, manufactured by DJI. The six-rotor M600 is an industrial drone that reportedly can carry payloads of up to 13 pounds, depending on the application. Not currently available for sale in the U.S., it was designed for use by photographers and other professionals.

Flytrex’s drones aren’t guided by remote control devices. Instead, they’re linked to a control system in the cloud, accessed by ground and air operators via a secure web page. The payload limit for the modified craft is 6.5 pounds, and the drones reportedly can travel at speeds of up to 14 miles per hour.

Initial deployments have carried fast-food orders as well as some consumer goods. At the outset, the drones are crossing a large bay in Reykjavik that separates the city’s shops and restaurants from a designated pickup point outside a residential neighborhood. During peak hours, they can save as much as 20 minutes over ground routes, which involve the use of a bridge.

Following a trial period, Flytrex and AHA were planning on expanding the service to carry packages over dozens of additional routes in Reykjavik, right into buyers’ backyards. Bash says the companies are in discussions with Icelandic transportation authorities about scaling up the service.

The notion of landing a drone in a crowded neighborhood seems impractical, if not dangerous. But Bash says the Flytrex drones don’t actually land at destination. Instead, they lower packages to the ground by wire. The craft are capable of hovering 50 feet in the air, he says.

So where could such an arrangement work? Every empty space of at least six feet square is a place where a drone could lower a package, Bash says. That could be on a rooftop, or even a street corner.

In the long term, buildings will be adapted to enable regular drone deliveries. “A hundred years ago, nobody needed parking in buildings,” Bash points out. “Ten years ago, nobody thought you needed a specific place for bikes to park.” Now, of course, such accommodations are mandatory.

Additional concerns about the widescale deployment of drones include noise, privacy and safety. On the noise issue, Bash counters that more vehicles aloft will mean less noise and congestion on the ground. And that, in theory, leads to fewer traffic accidents.

In addition, Bash says, drones are greener than grounded vehicles because they are 100-percent electric.

Other options for autonomous delivery in urban settings include sidewalk drones, which are already legal and in operation around the world. “The number of options, and the market potential, is huge,” says Bash. “The multi-trillion-dollar retail industry is just waiting for innovations in last-mile and on-demand deliveries.”

There are limits to the use of drones. Don’t expect them to be lugging heavy appliances. For such items, conventional trucks — although possibly self-driving in the future — will still be required. The solution to streamlining last-mile delivery will be multi-faceted, says Bash.

Flytrex and AHA are already moving to expand operations beyond Iceland. Flytrex has been approved to fly in another in a major city in Latin America, although Bash declines to reveal which one.

The company also has its sights on the U.S., potentially its biggest market, but the regulatory regime for drones here is far from settled. With pressure from giants such as Amazon, delivery drones could be fully approved for commercial use, without the handicap of line-of-sight requirements, by 2019, Bash believes.

On the issue of regulatory approval, he views Amazon as a “market enabler” with influence in Washington. “We hope they can help to make that happen,” he says.

Meanwhile, drone technology will continue to advance, resulting in craft that are larger in size, can carry bigger payloads, travel longer distances, and fly in poor weather conditions. And a technology that seemed highly impractical at the outset will become an increasingly familiar presence in urban areas and beyond.

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