Walmart Grounds Delivery Drones in Three States to Focus on Dallas

Walmart and drone delivery partner DroneUp are ending drone delivery in three states to focus on perfecting the airborne package delivery service in the Dallas-Fort Worth area.

Why it matters: Instant drone delivery only makes economic sense if it can be done at scale, and Dallas is emerging as the capital of drone delivery in America.

Driving the news: DroneUp tells Axios it is closing 18 Walmart delivery hubs in Phoenix, Salt Lake City and Tampa.

  • The three cities were part of a splashy rollout in 2022 that was described as the first large-scale drone delivery operation in the U.S.
  • Seventy employees, or about 17% of DroneUp’s staff, are losing their jobs in those cities.
  • The reduction will cut DroneUp’s delivery service to 15 Walmart locations: 11 in Dallas, 3 near Walmart’s Bentonville, Ark., headquarters and one in Virginia Beach, where DroneUp is based.

Between the lines:

 DroneUp CEO Tom Walker tells Axios the services in Phoenix, Salt Lake City and Tampa provided valuable lessons about consumer demand but were too small to be sustainable.

  • “We’re really focusing on automation, and a drone with higher payload capacity and longer range,” he said. “Now it’s time to focus on that scalable model.”
  • Earlier this year, DroneUp, which is partially owned by Walmart, unveiled a proprietary autonomous drone “ecosystem” that Walker says will revolutionize last-mile logistics.

Zoom in:

 It includes an automated, climate-controlled storage locker where drones can pick up and drop off packages and automatically recharge their batteries between deliveries.

  • The drones fly autonomously, monitored by a human operator in a central operations center.
  • DroneUp is also introducing a more advanced drone that travels 60 mph, has a 30-mile range, and uses a claw-like grabber to lift packages up to 10 pounds and store them safely inside its belly.

By the numbers:

 Drone delivery today isn’t sustainable, Walker tells Axios.

  • It costs the company about $30 to deliver a package by drone, he says. The goal is to get that cost below $7, which is close to ground-based delivery, but much faster.
  • “If we achieve the delivery cost point that we’re targeting, then it will no longer be something that people want, it’ll be something that they demand,” Walker said.

The big picture:

 Walmart earlier this year announced plans to expand drone delivery to 1.8 million residents in the Dallas area, covering about 75% of the population.

  • It’s partnering with Google-backed Wing and Zipline in addition to DroneUp, and is integrating the option for drone delivery into the Walmart app.

What they’re saying:

 “We are excited about the momentum and positive customer response we’ve experienced around drone delivery,” Walmart said in a statement to Axios.

  • “This service will continue to evolve as we learn more about customer preferences and drone capabilities.
  • “Our drone delivery program is still a pilot and by focusing our efforts in Dallas-Fort Worth, we can learn more about the potential to scale this innovative delivery option for Walmart’s customers.”

Source: AXIOS

 

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