Walmart plans to expand drone deliveries to three more states

CNBC

a day ago

Walmart is bringing drone deliveries to three more states.
On Thursday, the big-box retailer said it plans to launch the speedier delivery option at 100 stores in Atlanta, Charlotte, Houston, Orlando and Tampa within the coming year. With the expansion, Walmart's drone deliveries will be available in a total of five states: Arkansas, Florida, Georgia, North Carolina and Texas.
Customers will request a delivery through the app of Wing, the operator who flies the drones through a deal with Walmart. The drone operator will have an up to a six-mile range from stores.
Drone deliveries are one of the buzziest examples of Walmart's efforts to compete with rivals like Amazon on convenience along with low price. With more than 4,600 Walmart stores across the U.S., the retailer has used its large footprint to get online orders to customers faster. It has an Express Delivery service that drops purchases at customers' doors in as fast as 30 minutes, along with InHome, a subscription-based service, that puts items directly into people's fridges. The company began same-day prescription deliveries last fall and has expanded the service across the country.
"The number one piece of feedback that we get from our customers are, 'When are you expanding?'" said Greg Cathey, senior vice president of Walmart U.S. transformation and innovation, referring to drone delivery. Cathey said shoppers using the drone service typically order urgent items, such as hamburger buns for a cookout, eggs to make brownies or Tylenol or cold medicine needed when sick.
Drone deliveries take 30 minutes or less, the company said. So far, some of the most frequently delivered items include eggs, ice cream, pet food and fresh fruit, including bananas, lemons and eggs, Walmart added.
Walmart stores have an assortment of over 150,000 items in a location. Over 50% of those can be delivered by drone, Cathey said.
Yet the rollout of speedy deliveries across the U.S. has come with stops and starts. Three years ago, Walmart announced a plan to expand drone deliveries so it would be able to reach 4 million households across six states fulfilled from 37 stores in parts of Arizona, Arkansas, Florida, Texas, Utah and Virginia. At the time, the company's leaders said the retailer would be able to deliver over 1 million packages by drone in a year by using those sites. The rollout never stuck.
Walmart's drone delivery count so far is modest. The company did not share the specific count, but said it has racked up a total of more than 150,000 drone deliveries since 2021.
Chief competitor Amazon's expansion of drone deliveries has been slow-going, too. The e-commerce giant set a goal to deliver 500 million packages by drone per year by the end of the decade through its service, Prime Air.
So far, it has tested the deliveries in College Station, Texas, and Tolleson, Arizona, but it temporarily suspended service earlier this year after an abnormality with the drone's altitude sensor that required a software fix.
Walmart has tested drone deliveries in Northwest Arkansas, near its hometown of Bentonville, and scaled them to reach most of the population in the Dallas-Forth Worth area. Several drone operators, including Zipline, Flytrex, DroneUp and Wing, have powered Walmart's deliveries, but the retailer has not provided the financial terms of the deals or the amount of money it has made from sales delivered by drones.
Walmart said it currently has 21 live sites in Arkansas and Texas, which are operated by Wing and Zipline. Its contract with DroneUp ended last year.
Kieran Shanahan, chief operating officer of Walmart U.S., said the company wants to offer "flexibility and convenience" with drones, along with speedier deliveries by van.
"We see it as part of a broader ecosystem of things," he said. "And who knows what five years, 10 years time will bring as new technologies and capabilities unlock?"
If customers order in the Wing app, deliveries are free. Cathey said Walmart is testing the addition of a drone delivery option within its app in the Dallas area. As part of the test, deliveries cost $19.99 or are free for members of Walmart+, the company's subscription service.