WALMART customers who participated in a test of a new delivery service will lose it in all states but one.
The wholesaler partnered with DroneUp, a drone delivery service, in 2022.
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Arizona, Utah and Florida were all scheduled to test the launch of the new service.
However, according to Axios, Walmart has now withdrawn the hubs from these areas to focus on drone service in the greater Dallas-Fort Worth area.
Tom Walker, CEO of DroneUp, told the news agency that 18 Walmart delivery centers will be closed.
These are located in Phoenix, Salt Lake City and Tampa.
Walker explained that while DroneUp and Walmart have learned a lot about demand by setting up in these areas, the services are “too small to be sustainable.”
“We are really focused on automation and a drone with higher payload capacity and longer range,” the CEO explained.
“Now it’s time to focus on this scalable model.”
As a result of the closures, 17% of DroneUp employees will be unemployed.
While the instant delivery service is being perfected to make it a scalable and profitable model, DroneUp will only be available in 15 Walmart stores.
Most of the stores are in Dallas, three in Bentonville, Arkansas, where Walmart is based, and one in Virginia Beach, where DroneUp is headquartered.
“SKY HIGH”
In January, Walmart announced its “ambitious goals” to “complete the largest expansion of its drone deliveries of any U.S. retailer.”
The country’s largest retailer announced plans to serve 1.8 million North Texas households with its drone delivery service.
“Drone delivery is not just a concept of the future, it is happening now and will soon be a reality for millions more Texans,” the company said.
“This expansion will bring the ultimate convenience of drone delivery to communities throughout the DFW area,” said Prathibha Rajashekhar, senior vice president of innovation and automation at Walmart.
Despite closing locations in three states to focus on Dallas, Walmart is confident it can make its drone service scalable.
What is drone delivery?
- Used for food, groceries and medicines.
- Targets customers who “need something quickly, like a forgotten ingredient or an over-the-counter cold remedy.”
- Walmart’s on-demand drone delivery is carried out by Wing and Zipline, which have FAA approval for their drones.
- The package-transporting drones do not fly higher than 400 feet.
- Each unmanned drone will have operators to ensure that the drones follow their planned routes and thus keep their distance from each other.
- “Drone delivery offers customers an even faster delivery option. Items can be with them in 30 minutes or less, and some deliveries can be made in as little as 10 minutes,” Walmart said.
- They can transport multiple items at once, including fragile products such as eggs.
- The current delivery radius of Walmart drones is up to 10 miles from the store.
- “We believe 2024 is the year of drone deliveries,” said Wing CEO Adam Woodworth.
“We are excited about the momentum and positive customer response we have seen around drone delivery,” Walmart told Axios.
“This service will continue to evolve as we learn more about customer preferences and drone capabilities.
“Our drone delivery program is still in the pilot phase. By focusing our efforts on Dallas-Fort Worth, we can learn more about the potential to scale this innovative delivery option for Walmart customers.”
However, DroneUp’s Walker detailed the issues the retailer faces with this service, saying it is not sustainable in its current state.
The CEO announced that package delivery at Walmart costs around $30, but that customers will not have much demand for it until the price is below $7.
“If we get to the delivery costs we’re aiming for, then it will no longer be something people want, but something they demand,” Walker said.
The US Sun has contacted Walmart and DroneUp for comment.
Meanwhile, Walmart CEO Doug McMillon has promised his customers that he will “aggressively combat” rising costs.
