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Walmart Partners With Zipline for Drone Delivery Operations

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Walmart Inc. (WMT - Free Report) , which recently informed that it is testing drone delivery, announced yet another initiative in this regard. The supermarket giant is collaborating with Zipline to introduce drone delivery operations in the United States. This first-of-its-kind service will provide on-demand deliveries of certain health and wellness-related products, with scope to include general merchandise as well in the future.

Walmart stated that trial deliveries, leveraging Zipline’s technology, will be undertaken near the retailer’s headquarters in north-western Arkansas. The operator of the biggest drone-delivery network, Zipline, will be operational from a store of Walmart and able to provide deliveries within a radius of 50 miles (almost covering the state of Connecticut) in less than an hour. Notably, the speedy and environment-friendly delivery system is likely to start early next year, with scope for expansion if it turns out to be a success.

Walmart, less than a week ago, unveiled that it is piloting drone delivery with Flytrex, which is an end-to-end drone delivery company. Management stated that the pilot was launched on Sep 9 in Fayetteville, North Carolina. The pilot is focused on delivering certain grocery and essential household products from stores of Walmart to customers by leveraging Flytrex’s automated drones. As these drones are controlled over the cloud, it will enable Walmart to get a picture of the customers’ and employees’ experience, right from pickup to delivery.  
These moves reflect Walmart’s focus on trying new technologies to cater better to the customers. In fact, industry experts believe that this move marks another step by the company to stay firm against the growing competition from Amazon (AMZN - Free Report) , which recently got a nod from the U.S. regulators to fly delivery drones.

Walmart Plays Delivery Game Well

Walmart has been undertaking various moves to enhance deliveries. The company offers services such as Express Delivery, which helps deliver orders to customers in less than two hours. Walmart’s Pickup program enables customers to place orders online and then pick them up at a store. The company offers Delivery Unlimited membership options at 1,400 U.S. stores. Moreover, it will be launching the Walmart+ membership program, comprising unlimited free delivery, Scan & Go options and discount offers.

Apart from these, partnerships with Postmates, DoorDash, AxleHire and Roadie, and the acquisition of Parcel have been further supporting Walmart’s delivery capabilities. As of the end of the second quarter, Walmart U.S. had nearly 3,450 pickup locations and 2,730 same-day delivery locations. Robust delivery services, together with other e-commerce endeavors, helped this omnichannel retailer to record a whopping 97% increase in U.S. e-commerce sales in the second quarter of fiscal 2021. We believe that efforts to step up deliveries are likely to continue being in Walmart’s favor, especially at a juncture where social distancing has led to increased demand for contactless deliveries.  

Shares of this Zacks Rank #3 (Hold) company have rallied 16.3% in the past three months compared with the industry’s growth of 15.7%.

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