Walmart is scaling back its drone delivery operations in three states—Arizona, Utah, and Florida—to concentrate its efforts in the Dallas-Fort Worth area. Partnering with DroneUp, Walmart is closing 18 drone delivery hubs in Phoenix, Salt Lake City, and Tampa. This move will reduce DroneUp's service locations to 15, with the majority in Dallas, where the company aims to perfect its drone delivery model.
The decision to focus on Dallas comes as Walmart and DroneUp seek to make drone delivery economically viable at scale. Given its dense population and favourable logistics environment, Dallas is emerging as a key hub for this technology. Despite the initial enthusiasm surrounding drone deliveries in the three now-closed cities, the operations were not large enough to be sustainable. Seventy employees, about 17% of DroneUp's workforce, will lose their jobs due to the closures.
DroneUp's CEO, Tom Walker, emphasized the importance of automation and the development of drones with higher payload capacities and longer ranges. The company is introducing advanced drones capable of flying at 60 mph, covering a 30-mile range, and handling packages up to 10 pounds. These drones will operate autonomously and be monitored from a central operations center. They will utilize a proprietary autonomous "ecosystem" to streamline last-mile logistics.
Drone delivery is costly, with each package costing around $30. DroneUp aims to reduce this cost to under $7, making it competitive with traditional ground-based delivery methods but much faster. Walmart is also expanding its drone delivery service in Dallas, aiming to reach 1.8 million residents, about 75% of the area's population. The company is working with other drone partners, including Wing and Zipline, and integrating drone delivery options into its app.
Walmart remains optimistic about the future of drone delivery, seeing Dallas as a proving ground for refining and scaling the service. The company acknowledges that its drone delivery program is still in the pilot phase but is encouraged by the positive customer response.