Walmart has decided to put some of its delivery drones in airplane mode.
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The retail giant has elected to cut its drone operations in Phoenix, Salt Lake City and Tampa, Fla. It operated in those geographies with help from its partner, DroneUp.
A spokesperson for Walmart said the company made the decision to cut drone capabilities in those areas to focus more on exploring what drone delivery could look like at scale in a single metro area: Dallas-Fort Worth.
“We are excited about the momentum and positive customer response we’ve experienced around drone delivery. This service will continue to evolve as we learn more about customer preferences and drone capabilities,” the spokesperson said. “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.”
Walmart plans to continue its partnership with DroneUp in the Dallas-Fort Worth area, where it has 11 facilities. At present, it does not have plans to shutter other drone delivery centers. It has three with DroneUp in Arkansas, nearby its Bentonville, Ark., headquarters and one in Virginia Beach, Va.
In line with the groundings in Arizona, Florida and Utah, DroneUp told Axios it would close 18 Walmart delivery hubs and eliminate 70 employees, which amounts to about 17 percent of its total workforce.
A spokesperson for the company said the business will continue to adapt to meet the market demands.
“ Layoffs are an unfortunate part of a business that is literally defining its own industry. Like so many innovators before us, the decision to automate often leads to similar circumstances, but we acknowledge that this is a difficult time, especially for those with whom we’ve parted ways. While we are deeply grateful for their service, DroneUp remains committed to a strategy that supports our commercial partners and their customers,” the spokesperson told Sourcing Journal in a statement via email.
The company hopes its new model, called the Ecosystem platform, could be the way forward for DroneUp’s future expansion and retail collaborations. The company’s spokesperson said the platform, which expands the company’s capacity by allowing for pickup and drop off to and from retailers, could “reshape the last mile of delivery.” The company is still holding onto its ambition to expand nationwide, and as it does so, it will “rely on a bigger workforce in roles that will be defined by what regulators permit, and what partners and their customers need.”
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As it moves away from drones, Walmart customers in Phoenix, Salt Lake City and Tampa will still offer Express Delivery in those areas. That program allows customers to receive deliveries in less than two hours.
While it made plans to wind down in other locales, Walmart has brought on other partners to support its Dallas-Fort Worth aspirations. The company announced in January that it had teamed up with drone providers Wing and Zipline to better operations there.
At the time, the company said the expansion made it possible for Walmart to provide drone delivery for 75 percent of the population in the metro area. As of January, Walmart and its partners had successfully completed more than 20,000 drone deliveries on a slew of items.
Walmart also has partnerships with other drone companies, like Flytrex, which it has been piloting deliveries with in Fayetteville, N.C. since 2020. To date, Walmart has not announced plans to end that partnership, despite its focus on Texas.
Amit Regev, chief product officer and co-founder of Flytrex, said the company will continue to work with its partners on efficiency and cost as technology develops.
“Many of the drone delivery companies are focused on developing highly advanced and sophisticated drones, but this often leads to overly complex and costly models that drive up the cost per delivery— primarily due to inefficient operational modes, but also due to high drone amortization expenses,” Regev told Sourcing Journal. “To create a truly affordable drone delivery system, a more holistic and streamlined approach is essential. This involves designing simple, purpose-built drones optimized for…addressing the unique operational challenges of on-demand delivery services.”
Walmart’s major competitor, Amazon , has Prime Ai r drone delivery stations in College Station, Tex., about 180 miles south of Dallas, and in Tolleson, Ariz., just west of Phoenix. The company announced earlier this year it would discontinue its drone operations in California. It also has plans to move its drone operations into larger Amazon distribution centers to facilitate an expanded number of products eligible for same-day drone delivery.
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