, a Walmart – backed startup competing alongside Amazon and others in the nascent drone delivery market, is cutting jobs across the company, CNBC has learned.
The Virginia-based company began informing staffers of the layoffs on the morning of May15th, according to two people who lost their jobs and asked not to be named because they weren’t authorized to speak publicly on the matter.
Founded in 2016, DroneUp has a fleet of quadcopter-style drones that are designed to handle the last-mile portion of the delivery process, ferrying things like clothing, medication and food from warehouses to customers’ doorsteps.
The layoffs come as the tech industry continues to downsize and were part of the company’s decision to focus more on its delivery hubs, a network of facilities for on-demand orders in the U.S. DroneUp is moving away from enterprise services like construction and real estate monitoring, aerial data capturing, and marketing, the ex-employees said.
DroneUp confirmed the job cuts and the strategy change and said in an email that the layoffs hit “a small percentage of the team,” which now totals 418 people.
“After tremendous consumer adoption of our drone delivery services, we have made the decision to shift our business model to align our company structure around the continued growth and success of drone delivery and other drone services out of our Hubs,”
DroneUp CEO Tom Walker told CNBC in a statement.
The company said that over the next six months, “we will hire more people than were laid off.”
The implication is that the company may establish new positions within the drone business, particularly at its hubs, the bases of operation for its services. DroneUp operates 36 hubs out of Walmart stores.
It’s unclear exactly which teams were affected by Monday’s layoffs, but LinkedIn offers some clues. According to posts made by former DroneUp employees this week, the company fired its head of unmanned aircraft system (UAS) flight training, a flight engineer, a development services engineer and a UAS flight instructor.
Two marketing managers, two business analysts, and the director of business development also appear to be included in the cuts, per LinkedIn posts.
Though layoffs are rarely a positive indicator, DroneUp’s appear to be relatively small. The Virginia Beach, Virginia-based company is also not the only drone firm to trim headcount in recent months.
In January, Amazon’s Prime Air drone division was hit with “significant” layoffs as part of a companywide headcount reduction. Around the same time, Wing, the drone delivery arm of Alphabet, was also impacted by job cuts affecting the broader business. Since then, Amazon’s drone network has stagnated while Wing appears to be on track.
It’s difficult to say what DroneUp’s outlook will be. The Walmart-DroneUp network is coming off a record year that saw it expand to seven states and complete more than 6,000 deliveries. Recent partnerships with Iris Automation and Wonder Robotics should eventually enable beyond visual line of sight (BVLOS) services—which will help it scale further.
Currently, Walmart and DroneUp operate within a 1.5-mile radius of their store-based hubs. Increasing that range could go a long way toward expanding the market for those services and increasing demand.
All of that depends on BVLOS-enabling technology being tested and approved by the FAA and other entities. But clearly, delivery—and expanding the capabilities of hubs—is where the company’s focus will be moving forward.
Photo: A DroneUp drone makes a delivery out of a Hub at a Walmart store in Farmington, Arkansas – Walmart
Sources: CNBC; Flying Mag