How Walmart Is Expanding Its Use of Drone Deliveries

4 million households in 6 states now have access to Walmart drone delivery. 

And the company is finding consumer uptake not for emergencies as it expected, but primarily for convenience. Which perhaps underscores why retailers have less to fear from inflationary impact on sales than initially thought. JL 

Will Feuer reports in the Wall Street Journal:

Walmart is expanding its drone delivery operations to some 4 million households in six states, as the big-box retailer looks to add speedy delivery to compete with Amazon. Walmart will be able to deliver 1 million packages by drone a year in 30 minutes to households. The service will have a $3.99 delivery fee per order and can deliver up to 10 pounds at a time. “We’re finding customers use it for sheer convenience, like a quick fix for a weeknight meal.”

Walmart Inc. WMT 1.97%▲ is expanding its drone delivery operations to some 4 million households in six states, as the big-box retailer looks to add speedy delivery to compete in the nascent space with the likes of Amazon.com Inc. and FedEx Corp.

Walmart said Tuesday that it will be able to deliver more than 1 million packages by drone a year in as little as 30 minutes to households in parts of Arizona, Arkansas, Florida, Texas, Utah and Virginia. The service will have a $3.99 delivery fee per order and can deliver up to 10 pounds at a time.

The announcement is an expansion of a partnership with operator DroneUp LLC, which began operating drone-delivery hubs out of Walmart stores in Arkansas in November. Orders are fulfilled from stores, loaded onto the drones and delivered to yards using a cable that lowers the package to the ground. Walmart invested in DroneUp last June.

Walmart joins other retailers like Amazon, as well as delivery firms like FedEx and United Parcel Service Inc., to explore delivering items using drones. The companies have for years touted drones as a potential solution to the costly last mile of home deliveries and also to reach rural customers in a more cost effective way.

 

David Guggina, Walmart’s senior vice president of innovation and automation, said that the company has been surprised how customers have been using the drone service so far. They thought most orders would be for emergency supplies.

“We’re finding they use it for sheer convenience, like a quick fix for a weeknight meal,” he wrote in a corporate blog post Tuesday. A top seller at one hub: the boxed meal kitHamburger Helper.

Early commercial applications of drone operations have been limited. UPS’s first approval of commercial drone operations involved shipping medical products and specimens across hospital campuses.

FedEx’s Express unit earlier this year said it was partnering with Elroy Air Inc. on autonomous drone cargo delivery to move shipments between sortation centers.

UPS CEO Carol Tomé said earlier this year there will be a time when drones have a bigger role commercially.PHOTO: JONATHAN ERNST/REUTERS

UPS Chief Executive Carol Tomé earlier this year said that a broader commercial drone delivery network is still a ways off. “There are lots of issues with drones. You can’t fly them when it’s windy, you can’t fly them when it’s rainy,” Ms. Tomé said at a U.S. Chamber of Commerce event in January. “There will be a time when drones have a bigger role commercially.”

Other companies, including Wing, a unit of Google parent Alphabet Inc., have also been working on drone delivery for nearly a decade.

Advocates for drone delivery say the technology could reduce emissions, the cost per trip and traffic on America’s roads, while also making ultrafast delivery the new norm in the race toward e-commerce instant gratification.

Walmart said it would open up its expanded drone network to local businesses and municipalities, offering services in areas like insurance, emergency response and real estate. Revenue from those services will help offset the cost of home delivery and help Walmart collect more flight data, the company said.

Drones are the latest delivery method in Walmart’s arsenal. It has been testing everything from autonomous delivery vehicles to using gig workers for deliveries as the retailer seeks to bolster its e-commerce network to compete with Amazon.