Even if the FAA manages to establish regulations within the next two years, technological challenges may prevent Amazon from fulfilling the five-year time frame for its U.S. drone service.
The two biggest ones for small UAVs—the ones Amazon would likely use—are battery life and performance in bad weather such as strong wind and rain, Cummings said.
"The No. 1 thing for all aircraft is that it's limited by how much thrust and power the aircraft has and by how much weight you are carrying," she said. "Sure, it can fly for 30 minutes with a five-pound payload, but unless Amazon has made some battery breakthrough, it won't have the power for much more. And the sensors are just not there yet to fly in all weather conditions."
While the problem of weight and size of a package can be solved by using bigger drones for delivery, there's still the problem of 'sense and avoid,' which basically means equipping the device with enough sensors so that it knows when to avoid objects like a tree or bird, said Chris Anderson, CEO of 3D Robotics.
Unlike Google's self-driving car, which is loaded with sensors all over, drones simply don't have the physical space or power source to support the same kind of sensory just yet, Anderson said. And while many in the space are working on a solution for sense and avoid, it will still be awhile before the government approves the technology for residential use.
"First, you have to fix the problem well. Then you have to convince regulators that it works well. And Silicon Valley is fixing the problem at the rate of innovation in Silicon Valley, but the regulators will approve it at the rate things get approved in Washington." Anderson said.
Despite the obstacles, though, Amazon's move is in the right direction because it will put pressure on the FAA and may help spur other industries to adopt drone technology, experts say.
(Read more: Cramer on Amazon drones: 'It could be like World War Z')
Drones are gaining in popularity in agriculture, for example, for monitoring and dusting crops. They also can be helpful to emergency responders, such as firefighters.
And Hollywood is using UAVs for certain shots, as they are cheaper and safer than using a cameraman in a small plane or helicopter.
"I'm really happy Amazon came out with this big announcement," Cumming said. "The economic power that they have will help push this agenda. There hasn't been a big stick. ... They could be that big stick; they could be the tipping point."
—By CNBC's Cadie Thompson. Follow her on Twitter