Walmart Expands Drone Delivery Service to 4M Households
Walmart is expanding drone delivery across six states this year, making it possible for many more customers to get a box of diapers or dinner ingredients delivered in 30 minutes or less. Through an expansion with operator DroneUp, the big-box retailer said it will be able to reach 4 million households in parts of Arizona, Arkansas, Florida, Texas, Utah, and Virginia. The deliveries by air will be fulfilled from a total of 37 stores — with 34 of those run by DroneUp. Customers who live within the range of a Walmart drone-delivery site can order items between 8 a.m. and 8 p.m. Each drone delivery comes with a $3.99 fee. Customers can order items totaling up to 10 pounds.
Total Retail's Take: In its quest to get online orders to customers as quickly and efficiently as possible, Walmart is taking to the air. The retailer's use of drones is another way it's incorporating its physical stores into the order fulfillment process, a key advantage it has over its prime competitor, Amazon.com. Walmart believes that the speed and convenience that it can offer by fulfilling online orders from its stores will prove a differentiator for consumers, enticing them to make the big-box retailer their preferred online destination.
However, there are a couple of factors that must be considered before declaring the use of drones a competitive advantage for Walmart. One, studies have shown that consumers are more willing to wait for shipping if it's free vs. paying for fast shipping. Is there enough demand for ultrafast drone delivery to profitably scale the service? Two, given the weight limitation on drone orders, does Walmart sacrifice average order value for its drone customers, who otherwise might have made additional purchases in-store? While drone orders make sense for customers in certain situations, I don't think we're going to see other retailers rushing to adopt the delivery method.
