The battle of the delivery drones has officially begun: Amazon took a shot last month and now Walmart is firing back in kind.
Walmart, the world's largest brick-and-mortar retailer, announced two separate deals with drone delivery services in the past week. They are designed to allow the company to experiment with a drone program involving grocery, household and health items to try to one day get orders to customers faster than by truck.
The news comes just days after Amazon, the largest e-commerce company, received Federal Aviation Administration approval to experiment with drone deliveries as part of its Prime Air division, which it announced seven years ago.
“We know that it will be some time before we see millions of packages delivered via drone,” Tom Ward, Walmart’s senior vice president of customer product, said in a blog announcement. “That still feels like a bit of science fiction but we’re at a point where we’re learning more and more about the technology that is available and how we can use it to make our customers’ lives easier.”
Drone deliveries are one way Walmart is expanding the use of its investment in 6,000 stores and numerous fulfillment and warehouse sites. It can also address swelling demand for quick delivery as well as finding ways to cut the escalating related costs of labor-intensive deliveries, all while reducing its carbon footprint and truck traffic.
It’s much the same for Amazon. The company is building fulfillment warehouses, positioning its Whole Foods stores for double duty as distribution sites, and expanding full grocery- and convenience-store sites that it plans to also use as fulfillment centers.
Despite all the progress, a world where various drones are flying around your neighborhood is still years away. Besides the safety measures that must be met to avoid a drone hitting someone in the head, for instance, deliveries may be regulated per municipality. That could lead to a hodgepodge of air-traffic issues.
While drones might do wonders to speed delivery, there’s skepticism about their impact on e-commerce profitability, considering the expense of developing the technology, operating it and the small payloads they can carry, said Anjee Solanki, the national director of retail services for Toronto-based brokerage Colliers International.
Given that there are many less complicated ways for consumers to obtain their purchases, the technology might be better used for food-delivery services like pizza parlors, Grubhub and Bite Squad, she told CoStar News.
“Are we solving a problem here, or is it just a cool way to get the goods there?” Solanki asked.
When Amazon CEO Jeff Bezos first unveiled the e-commerce giant’s Prime Air plans — using drones to deliver packages — on “60 Minutes” in 2013, he noted the futurism of a world with tiny helicopters air lifting bundles to doorsteps.
“I know this looks like science fiction,” he said. “But it’s not.”
Bezos predicted then drones would be a common sight in five years, which didn't happen. But in 2020 when a pandemic shifts more consumer spending online and same-day delivery becomes a mantra, Bezos’ future looks like it could be closer.
Late last month, the FAA gave Amazon’s Prime Air division the nod to move its proprietary MK27 drone from test-only flights to real delivery fulfillment for customers in select areas. It followed similar OKs for Google parent Alphabet and UPS Flight Forward, neither of which has started drone deliveries.
That put Amazon a step closer to its vision of 30-minute delivery, though there are still plenty of regulatory and consumer acceptance issues to hurdle.
Walmart, which has been toying with drone delivery for many years as well, announced it is launching a pilot drone-delivery program of select grocery and household essential items with Flytrex, an end-to-end delivery firm.
It plans to test the automated drones from its stores in Fayetteville, North Carolina, which borders the Fort Bragg military base.
Walmart also said it is teaming with Zipline, known for its lifesaving drone deliveries in Ghana and Rwanda, for on-demand health and wellness product deliveries. The Bentonville, Arkansas, retailer plans to test that system near its headquarters early next year, trying 60-minute or less deliveries in a 50-mile radius.