Brent Morgan is one of many Americans who left a Walmart package at home during the Coronavirus pandemic. However, his delivery did not fit into the typical shape.
A drone flew over his head and dropped a bag on his lawn. Inside was a Covid-19 test kit for use at home.
Last month, Walmart announced three contracts with drone operators to test different applications for the drones. It is teamed up with Flytrex Food and household items delivery in Fayetteville, North Carolina. It is planning another pilot project with zipline, a company best known for its medical drone shipments in African countries such as Ghana and Rwanda, which will provide on-demand health and wellness products early next year. And be Testing the home delivery of Covid-19 test kits With Quest diagnosis and DroneUp in Las Vegas and Cheektowaga, a suburb of Buffalo, New York.
Drones, once considered futuristic or new, have grown in popularity as a potentially common way for retailers to deliver purchases to their customers. Growing ecommerce sales have put pressure on retailers to speed up deliveries and use fast turnaround times as a differentiator. More and more Americans have gotten used to drones because they saw them in the sky or bought their own hobby drone. Pandemic-related trends such as shopping from the couch instead of the store aisle and restricting contact with strangers could also make them more attractive.
Tom Ward, senior vice president of consumer products at Walmart, said drones could be another way to use the giant big box stores “to serve customers in as many ways as possible that suit their needs, be it speed.” or convenience. “
“Drones are now in a place where I think technology is a great opportunity,” he said.
However, Walmart and its competitors have to overcome a variety of hurdles, such as: B. Reduce the cost of deliveries and overcome the backlash of people who see humming delivery vehicles over their backyard as a nuisance or invasion of privacy.
Walmart hasn’t released any terms on its contracts with the drone companies and wouldn’t say how the costs will be shared.
Ward said the retailer is still testing, trying to better understand what consumers want and what the supplies would cost. He said Walmart doesn’t yet know when drone shipments could be widespread in the U.S.
“Wherever we see success and where we can see that this offer makes sense for customers and for the company, we will move very quickly,” he said.
The “drone wars”
With the drone tests, the big box retailer is trying to keep pace with Amazon’s dominant e-commerce business. Amazon’s robotics team has built their own drones and received certification from the Federal Aviation Administration A fleet of Prime Air delivery drones is due to be in operation at the end of August. It comes under Part 135 of the FAA regulationsThis gives Amazon the ability to move property “out of sight” of the operator on small drones.
The approval grants Amazon extensive privileges to “deliver packages to customers safely and efficiently,” the agency said.
Walmart has taken a different pace and partnered with existing drone companies rather than building and operating their own.
Even when Ward entered the drone wars, he said it had an advantage: a huge area of more than 5,300 stores across the country, including its subsidiary Sam’s Club. This could make it easier and cheaper for Walmart to deliver via drone compared to Amazon, which relies on a network of large fulfillment centers that are often farther away from customer neighborhoods.
“With 90% of Americans within 10 miles of Walmart, a drone is a fantastic solution where we are uniquely positioned to be successful,” said Ward.
He said the retailer wanted to better understand how customers could use drones. For example, parents might order a thermometer or over-the-counter medicine for a sick child late at night.
One of Walmart’s top executives recently saw the drone being tested at close range. John Furner, US CEO of Walmart, visited Las Vegas last week to see a Covid-19 test from DroneUp, one of the retailer’s partners. in the a LinkedIn postHe said the companies had already operated 57 flights with an average time of around 10 minutes and delivered 24 Covid-19 home test kits to customers.
“One customer said he didn’t think he’d see drone deliveries in his life, but we’re making it happen,” he wrote.
Vijay Mookerjee, an economics professor at the University of Texas at Dallas, said drone delivery was a logical next step for retailers – especially at the popularity of online shopping during the pandemic. He said the secret is to shorten delivery times, so it’s faster than a trip to a nearby store.
He said faster drone deliveries could create “instant gratification” and create a loop that will encourage customers to buy more and reduce the number of items customers leave in their virtual shopping cart.
“It’s not so much a cost-saving idea,” he said. “It’s about an idea to increase demand.”
Plus, it could lead to additional sources of income – if Amazon or Walmart offer drones as a service to retail competitors or vendors selling in their market.
When the drone dropped off in late September, Morgan captured a video of his drone delivery to share on Facebook. The 38-year-old said he had decided to order a Covid-19 test kit for himself and his fiancé as he prepared to return to work. The descending drone was also noticed by its neighbors, who stepped outside to watch.
Morgan hopes the delivery is a preview of the future. He said he imagined ordering a takeout drone or having the new Call of Duty video game delivered to his home minutes after it hit the shelves.
“I’m all for playing ‘Jetsons’,” he said. “It’s cool to see the world unfold before me.”
– CNBCs Annie Palmer contributed to this report.