Walmart Inc. upped the ante on its drone delivery program, further adding to its bigger aspiration of growing an ecosystem of services for other businesses.
The company pushed past last week’s disappointing earnings news to reveal plans on Tuesday to roll out its DroneUp delivery service to 34 locations this year for air delivery to customers.
Walmart said expansion of the drone delivery program, in partnership with Virginia Beach, Va.-based drone development company DroneUp, could mean access to as many as 4 million households in Arizona, Arkansas, Florida, Texas, Utah and Virginia.
“After completing hundreds of deliveries within a matter of months across our existing DroneUp hubs, we’ve seen firsthand how drones can offer customers a practical solution for getting certain items, fast,” Walmart U.S. senior vice president of innovation and automation David Guggina said in a blog post announcing the program update.
Guggina said the retailer originally began testing the drone delivery service assuming consumers would use it for emergency purchases, but transactions have shown a reliance on it for the convenience. The executive said Hamburger Helper, for example, is a top seller at one of the operational hubs.
The sites where the company has DroneUp hubs have certified pilots flying the drones. Stores handle the fulfillment, while customers are able to place orders between 8 a.m. and 8 p.m. with a maximum delivery weight of 10 pounds. Walmart charges a $3.99 fee for the service.
Related Stories
Walmart’s plans for DroneUp go beyond serving its store shoppers, with the company saying its network of hubs could be used by other businesses and cities for their own purposes.
Offering the hub for more than customer delivery would create another revenue stream that could pay for delivery and also build on data about the drone technology, Guggina said.
Commercialization of the drone hub network is just the latest example of Walmart’s ambitions as a business-to-business service provider outside of simply being a retailer.
“Globally, we continue to build new mutually reinforcing businesses. As we grow in areas like marketplace, that leads to growth and fulfillment services and advertising ecosystem. Our B-to-C relationships lead to complementary B-to-B relationships, which strengthen our P&L,” Walmart Inc. president and CEO Doug McMillon told analysts last week during the company’s quarterly earnings call.
The company has launched service offerings in fulfillment, delivery and advertising, building up a portfolio that competes with Amazon Marketplace and the e-tailer’s related businesses, such as Fulfillment By Amazon.
For Walmart, it starts with its Marketplace.
The company doesn’t disclose the number of sellers on its platform, but online retail insights firm Marketplace Pulse estimated that to be 151,136 as of May 25.
To help sellers boost their brands online or in store, Walmart Connect is the company’s advertising arm.
Last July Walmart said it formed a partnership with Adobe that tacked on Adobe Commerce to the Walmart Marketplace. That integration meant other retailers could use the cloud-based tech to offer their customers pickup and delivery options.
“Commercializing our technologies and capabilities helps us sustainably reinvest back into our customer value proposition,” Walmart U.S. CEO John Furner said at the time of the Adobe Commerce integration.
Walmart Fulfillment Services (WFS) provides storage and fulfillment services to Marketplace sellers. Fulfillment rates start at $3.45 for a pound or less of product, while storage starts at 75 cents per cubic foot per month.
Shipping includes standard, along with three-, two- and next-day delivery.
That distribution network is set to see more robotics and automation from artificial intelligence company Symbotic pumped into all of its 42 regional distribution centers over the next roughly eight years. That builds on an initial agreement that had Symbotic’s tech in 25 of the company’s distribution centers.
Walmart also disclosed last week that the company’s last mile delivery service, called GoLocal and launched last year, has grown to 1,600 delivery points domestically.
The new line of business was announced as yet another way to help Walmart diversify its overall revenue.
Chico’s FAS began offering same-day delivery through GoLocal for its namesake brand, along with White House Black Market and Soma stores, in December. Kelly-Moore Paints was the most recent business to sign onto GoLocal in late April with same- and next-day delivery offered to trade professionals through the delivery service from some of the company’s stores in California, Nevada, Oklahoma and Texas.