What the business is
Drone delivery company operating Walmart store delivery hubs, with its DBX Ecosystem platform
The bet
Delivery by drone from Walmart stores in many US metros could scale into a cost-effective service
How it started
In 2022 Walmart and DroneUp announced they would bring drone delivery to Arizona, Utah and Florida as part of a broader expansion. Walmart also works with Alphabet's Wing and Zipline in Dallas-Fort Worth and with Flytrex in Fayetteville, North Carolina.
What happened
DroneUp CEO Tom Walker told Axios a drone delivery cost about $30 and DroneUp wanted to bring it below $7. The services in Phoenix, Salt Lake City and Tampa were not sustainable, according to Axios. Amazon had also adjusted drone plans, announcing in April it would shut down California drone delivery.
How it ended up
In August 2024 DroneUp was closing 18 Walmart delivery hubs, with 17% of its workforce (70 staff) losing jobs, leaving 15 Walmart locations in Dallas, near Bentonville and Virginia Beach. Walker said DroneUp was entering a new strategic phase, streamlining core geographies around its DBX Ecosystem. Walmart said the program remained a pilot focused on Dallas-Fort Worth.
What has to be true
Per Axios, the Phoenix, Salt Lake City and Tampa services were not sustainable
A drone delivery cost about $30 against DroneUp's goal of under $7
Walmart wanted to concentrate on Dallas-Fort Worth, where it also uses Wing and Zipline
DroneUp wanted to streamline core geographies and build a scalable model
What can be applied
Drone delivery at about $30 a drop does not work against a sub-$7 target; shrinking to a dense metro lets a company learn whether the economics can improve.
Aftermath
As of 2024-08-16, DroneUp was closing 18 Walmart hubs and cutting 70 jobs, leaving 15 Walmart locations; Walmart called its drone program still a pilot.
FOLLOW THE EVIDENCE
The sources
- Walmart is ending DroneUp deliveries in three states theverge.com