May 24, 2022 - Economy

Walmart to begin America's first large-scale drone operation in 6 states

Image of a DroneUp drone delivering a package for Walmart

DroneUp is delivering packages for Walmart. Photo courtesy of DroneUp

Walmart customers in six states will soon be able to have their orders delivered by drone in less than 30 minutes.

Why it matters: This will be the first large-scale drone delivery operation in the United States. So far, drone deliveries have been available only in a few small towns, with customers selecting from a short list of items.

Driving the news: Walmart's DroneUp delivery network will expand to 34 sites by the end of the year, potentially reaching 4 million U.S. households, the retailer said.

  • The new markets are Phoenix, Ariz.; Tampa and Orlando, Fla.; Dallas, Texas; Salt Lake City, Utah; and Richmond, Va. (Walmart already has limited drone delivery in Arkansas.)
  • Drone delivery will be available 8 a.m. to 8 p.m. from at least three Walmart stores in each city.

The scale of Walmart's planned operation is significant in other ways too.

  • Shoppers won't be limited to a short list of preselected items. Instead, they'll be able to order anything from Tylenol to diapers to hot dog buns — 100,000 different products in all, up to a total of 10 pounds — to be delivered by drone for $3.99.
  • "If it fits safely, it flies," DroneUp CEO Tom Walker tells Axios.
  • When the service is up and running, Walmart says it could deliver more than 1 million packages a year by drone.

The big picture: The race to bring drone delivery to U.S. households is shaping up as a battle of titans, as everyone from Amazon and Alphabet to UPS and Domino's invests.

  • So far, Walmart seems to be out in front — but that could change quickly.

The intrigue: Walmart and DroneUp will offset the cost of delivery with revenue from other drone-related services, such as insurance inspections, emergency response and construction oversight.

  • For example, a local construction agency could work with DroneUp to monitor onsite job progress through aerial drone photography.
  • Those other services will help the entire drone industry by gathering more flight data.

Of note: Walmart is a minority investor in DroneUp and has a seat on its five-member board.

What they're saying: The Federal Aviation Administration is paying close attention to what Walmart and DroneUp are doing as it prepares regulations that will allow widespread drone deployment over longer distances.

  • "We think it’s important to show, yes, as operators, we can open 34 locations and recruit and find the right operators," says Walker of DroneUp.
  • "We can manage airspace safely so they can assess that this is really a viable, scalable, business model."

The big picture: Drone delivery is the latest effort by Walmart to expand customers' delivery options.

  • With Express delivery, you can have purchases delivered to your doorstep in as little as two hours.
  • With InHome, a Walmart employee will place an order right in your refrigerator.


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