Walmart Invests in Drone Deliveries in E-commerce Quest

Walmart is looking to the skies. 

The retailer, whose executives have spent the past year emphasizing its e-commerce ambitions and strategies to shorten delivery times, said it is investing in DroneUp, which offers data collection services using drones. 

Walmart said it had previously teamed with the company to do trial deliveries of COVID-19 swab kits, a process that showed delivery time could be cut by hours, according to the retailer. 

“Walmart already has a significant part of the infrastructure in place — 4,700 stores stocked with more than 100,000 of the most purchased items, located within 10 miles of 90 percent of the U.S. population,” Walmart U.S. chief executive officer John Furner said in a blog post Thursday.

“This makes us uniquely positioned to execute drone deliveries, which is why our investment in DroneUp won’t just apply to the skies but also the ground,” he wrote. 

The company said it would be unrolling its first operations with the company in Arkansas, and indicated plans to scale the operations over time.

“Conducting drone deliveries at scale is within reach,” Furner wrote. “DroneUp’s expertise, combined with our retail footprint and proven history of logistics innovation, puts us right where we want to be for that day. Because when it comes to the future of drone delivery, we know the sky’s the limit.”

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The retailer has stressed in recent months that it is reviewing strategies for last-mile delivery — the final stage of a product reaching the customer — and looking for ways to reduce costs and time. 

“Last-mile will be really important,” Walmart chief financial officer Brett Biggs said at the Evercore ISI summit this month. “And, I think, right now, we’re in a good place to have optionality on how we fulfill that last-mile, and continuing to keep options open in a way that as it becomes more clear maybe, the best way to do that for the company that we’ll have the ability to make those choices when we need to.”

Drone deliveries, still a while from being scaled to mass use, are being viewed as a way to circumvent traffic, and as part of a shifting retail model during the COVID-19 pandemic, said Mike Walden, professor of economics emeritus at NC State University. 

“Even before the pandemic, with more people using computers and the internet to shop, and more people willing to have products brought to their homes, the capabilities of drones were being considered,” he said. “Now, I think that’s even more likely, as retailers are trying to assess what the post-pandemic retail model is going to be, and whether they can incorporate drone delivery as part of that.” 

The Federal Aviation Administration, which regulates drone activity, has so far shown its inclination to green-light this type of drone use. In December, the agency said certain small drone operators would be able to “fly over people and at night under certain conditions.” 

There are already more than 1.7 million drone registrations and 203,000 FAA-certificated remote pilots, according to the agency, which at the time also described drones as the “fastest-growing segment in the entire transportation sector.” 

“As we enter the post-pandemic economy, I think in a lot of areas of life, not just business or commerce, many things are going to be questioned,” said Walden. “Many new ways of looking at things and doing things are going to be considered.”  

“And I think that there are challenges — can you do drone delivery in a highly dense area — probably not, initially. I think it’s going to be something that’s used in suburban or rural areas,” he said.  “I don’t think we have a lot of answers, but clearly, the possibilities are there.”

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