Walmart has decided to end package delivery by drone in three cities and focus on improving its airborne delivery service in the Dallas-Fort Worth area.
Walmart plans to shut down its 18 drone delivery hubs in Phoenix, Salt Lake City, and Tampa, Axios reports, in part because customer demand there is too small to be sustainable.
Walmart offers these deliveries with DroneUp. It invested in the company in 2021 to help grow its delivery business after initially partnering with the company in September 2020 to deliver COVID-19 home test kits in Nevada and New York. "The trial demonstrated we could offer customers delivery in minutes versus hours," Walmart US CEO John Furner said at the time.
Walmart launched its drone delivery service in Phoenix, Salt Lake City, and Tampa in 2022.
After those sites are shut down, DroneUp delivery will be available in 15 Walmart locations: 11 in Dallas, three near Walmart's Bentonville, Arkansas, headquarters, and one in Virginia Beach, where DroneUp is based, Axios notes. Earlier this year, Walmart announced plans to expand drone delivery in the Dallas area to cover 1.8 million residents of the city, roughly 75% of the population. In Dallas, it also works with Wing and Zipline to handle those deliveries.
DroneUp CEO Tom Walker told Axios that drone delivery currently costs the company around $30 per package. The ultimate goal is to get that cost under $7.