CEO Eyes Breakthrough Year as DroneUp Ramps Up Walmart Delivery Pilot

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The past year represented successful growth of DroneUp's delivery operations. The last-mile drone delivery company, which is making deliveries of medicines and other items around the world, made two acquisitions and launched a pilot program with the world's largest retailer.

Now CEO Tom Walker is hoping 2022 results in even greater growth as the company ramps up its drone delivery pilot with Walmart and collects more data with each flight.

"There is some consistent data we are collecting [on each type of flight], such as how many hours we can operate [or] why we couldn't operate," Walker told Modern Shipper in an interview at the National Retail Federation's Big Show this week in New York City.

Walker said he never realized how much data could be collected, but that data is now helping inform critical decisions as DroneUp continues to ramp up operations. The company is expecting to launch two new drone pilots in the next two months with Walmart WMT, joining the current operation in Farmington, Arkansas. The new Drone Hubs will be located in Bentonville and Rogers, Arkansas, and will represent a new test for DroneUp, Walker said. The current operation runs from a smaller Walmart Neighborhood Market. The new pilots will fly from Walmart Supercenters.

Walker said he anticipates more locations popping up later this year across the country.

"Community engagement has been phenomenal," he said, noting that the reorder rate in Farmington has been "off the charts."

"You never really expect that second order," Walker added. He said first orders are typically "novelty orders" and are often a bag of candy just so the consumer can see the drone. But once they experience drone deliveries, many people use them again.

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Currently operating with a 1.5-mile delivery radius, DroneUp expects to have a 10-mile delivery radius by the end of 2023. Average delivery time is 17 minutes, measured from the time the order is placed to the time the item is delivered to the home.  

For safety reasons, each drone has a separate departure and return altitude to avoid midair collisions. A safety pilot monitors the drone's performance and launches each drone once it is deemed safe. Walker said someday he hopes the entire process is automated. Until then, DroneUp is focused on improving the service.

"We'll get there; we've got some things to figure out," he said.

Walker said among the lessons is better integration and clarity on the items being shipped. He cited an example of a customer that ordered a toy canoe and truck set, but when the item was brought out to the drone launch pad, what came out was a full-sized canoe (there is a 10-pound limit to cargo).

One area that has been satisfactory is the issue of noise. A common complaint from opponents of drone deliveries is that drones are noisy. The DroneUp drones lower their items to the ground on a tether and can do so from up to 200 feet off the ground, landing the item within about a 3-foot radius.

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Watch: Making drone delivery work in urban environments

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"We've had many customers tell us they never knew the drone had delivered the item until they got the notification of the delivery," Walker said.

Unlike many drone proponents, Walker is realistic about where drones fit into the future last-mile delivery space.

"We don't think drones are ‘the' solution," he said. "We think drones are a part of the solution."

That part of the solution is likely for immediate convenience items, Walker noted.

"I need AAA batteries because the remote went out and I'm having a party," he cited as an example. "I'm not going to drive to Walmart. I'm more likely going to have to go to a convenience store [and pay more]. Drones allow the Walmarts [and other big box retailers] to get some of that convenience store market."

7-Eleven is testing drone delivery in Japan, but Walker said he thinks larger retailers will have advantages due to the larger number of SKUs available and a larger customer base.

"The big [consideration] is cost per delivery and you lower the cost through volume," he said.

In December, DroneUp acquired digital airspace and automation company AirMap. Earlier in 2021, the company acquired Web Teks, a drone flight services provider. Both acquisitions are part of efforts to build the safest drone operation possible. Part of that is also monitoring weather conditions. Walker said DroneUp is collecting weather data from each flight every 15 seconds, providing micro-level weather data. In combination with microweather data collected from outside firms, DroneUp is able to share that information with its partners, helping companies like Walmart inform customers during the checkout process when drone service is an available option.

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"We have on-site microclimate data that says we have 30 minutes to make this delivery," Walker said. "The customer is seeing real-time data."

When drone delivery is not available, the customer is provided alternate delivery options.

Drone delivery still has a long way to go to become a common occurrence, but Walker thinks it will get there.

"To me, drones represent the premier option for 30 minutes or less," he said.

Click for more articles by Brian Straight.

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This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.