Walmart building capacity to deliver 1M packages a year by drone

Dive Brief:

Walmart is expanding its drone delivery service with DroneUp to 34 new sites in six states by the end of 2022, David Guggina, senior VP of innovation and automation at Walmart U.S., announced in a blog post Tuesday.
The expansion gives Walmart "the potential to reach 4 million U.S. households" in Arizona, Arkansas, Florida, Texas, Utah and Virginia, according to Guggina. Walmart will also be able to deliver more than 1 million packages by drone annually.
Customers in eligible areas can order from tens of thousands of items between 8 a.m. and 8 p.m. for drone delivery in as little as 30 minutes. "For a delivery fee of $3.99, customers can order items totaling up to 10 pounds, so simply put, if it fits safely it flies," Guggina wrote.

Dive Insight:

The network expansion will bring Walmart's full drone delivery network to 37 sites, after DroneUp announced in November three hub sites would launch in Northwest Arkansas. It also marks a new chapter in Walmart and DroneUp's alliance.

The partnership has evolved significantly since the two companies worked together to test drone delivery for at-home COVID-19 self-collection kits in September 2020. Walmart revealed in June 2021 it made a strategic investment in DroneUp, with its first official drone operation launched from a Bentonville, Arkansas store. In November, DroneUp announced three full-time hubs would be active at Walmart stores in Northwest Arkansas.

"Walmart is well-positioned to be the drone delivery leader as it already has significant infrastructure in place to serve the public – more than 4,700 stores stocked with 120,000 of the most purchased items, located within 10 miles of over 90 percent of the U.S. population," according to the DroneUp announcement.

Walmart's expansive footprint will be an advantage for the company as retailers grapple with how to make drone deliveries efficient for business and accessible for customers. Package-carrying drones haven't filled the skies as some expected when Amazon announced its plans for Amazon Prime Air in 2014. Amazon's efforts have been beset by high delivery costs, as Insider reported, and issues during testing, according to Bloomberg.

At existing DroneUp hubs, Walmart has completed "hundreds of deliveries within a matter of months," Guggina wrote. Many customers are using the service for convenience rather than emergency items — Guggina wrote that the top-selling item at one hub is Hamburger Helper.

To receive a delivery, a customer enters their address to verify eligibility and places their order, per DroneUp's November announcement. Then, operators pack the order and secure the box to the drone, and the flight engineer guides the delivery to the customer's home. Orders can be placed on DroneUp's website.

Participating stores in the expansion will establish DroneUp delivery hubs that include a team of certified pilots. Orders are fulfilled from the store and delivered by drone into customers' yards "using a cable that gently lowers the package," according to Guggina. DroneUp will also offer drone services for local businesses and municipalities through the hubs, such as aerial drone photography for a construction agency.

"Not only will the added revenue help offset the cost of delivery, but it also serves the entire drone industry by gathering more flight data as we work together to expand drone operations in a safe and regulated way," Guggina wrote.