Walmart's Drone Air Force May Be Winning the War

Since last November, Walmart has been delivering packages weighing up to 10 pounds to customers within a 1.5-mile radius of two stores near its Bentonville, Arkansas, headquarters. The service followed a Walmart investment in DroneUp, a startup that provides drone technology and services (pilots, mainly).

Walmart announced Tuesday morning that it plans to expand the service to 34 U.S. cities in Arizona, Arkansas, Florida, Texas, Utah and Virginia by the end of this year. Drone delivery will be available from 8 a.m. to 8 p.m., daily and will cost $3.99 per 10-pound package. Walmart said it could make the deliveries in as little as 30 minutes, and the expansion gives the retail giant the capability to make more than 1 million deliveries a year.

There’s competition, of course, but Walmart may have the inside track. Amazon’s drone air force has sputtered. Then-CEO Jeff Bezos said in 2013 that Amazon’s drone fleet would be available within 5 years or so. That prediction has not come to pass, even though the company has spent a reported $2 billion and built a global team of more than 1,000 people to make it happen.

In March, Alphabet’s Wing drone service announced that it had made 200,000 drone deliveries in three countries: the United States, Finland and Australia. The company’s CEO, Adam Woodworth, said in April that it had made more than 50,000 deliveries in a suburb of Brisbane. Wing also launched its service in a couple of Dallas suburbs in April.

What’s different about Walmart’s effort is its decision to lease, not buy, the technology and services. DroneUp claims a pilot corps of 20,000 and nearly 200 active waivers and authorizations from the U.S. Federal Aviation Administration to fly its drones.

Another difference is that Walmart has more than 10,500 store locations worldwide (more than 4,700 in the United States) from which to deliver goods. Neither Alphabet nor Amazon can claim anything near that number of physical locations.

One potential competitor that could match Walmart’s U.S. geographic reach is UPS, which received FAA approval in 2019 to test its Flight Forward program. CEO Carol Tome was not terribly enthusiastic about drone delivery this past January, however: “You can’t fly them when it’s windy. You can’t fly them when it’s rainy. There are lots of issues with drones.”

According to Walmart’s announcement, stores offering drone deliveries will house a DroneUp delivery hub, including certified pilots operating within FAA guidelines, to manage flight operations for deliveries. Once an order is placed, items are fulfilled from the store, loaded into the drone, and delivered using a cable that gently lowers the package.

Walmart and DroneUp also plan to offer local businesses and municipalities “aerial drone solutions in areas like insurance, emergency response, and real estate.”

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