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Walmart (WMT) Takes Forward Drone Deliveries, Invests in DroneUp

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When it comes to grocery deliveries, Walmart Inc. (WMT - Free Report) has been coming up with ambitious efforts that are efficient and incorporate advanced technologies. This supermarket giant has been exploring opportunities in drone delivery and has decided to invest in DroneUp. The move comes after successful trials during the pandemic. Clearly, the company is undertaking every effort to develop a futuristic and well-coordinated delivery network that spans across the streets, sidewalks and the skies. Let’s delve deeper.

Drone Deliveries Raises the Game

In 2020, Walmart had partnered with drone services provider — DroneUp — for carrying out trial deliveries of at-home COVID-19 self-collection kits. These test runs enabled the company to deliver packages in minutes in comparison to hours. After conducting hundreds of such drone test deliveries from Walmart stores, the company has finally decided to invest in DroneUp. The move is likely to help in the development of a scalable last mile delivery solution.

Markedly, DroneUp is a well-known and a government-authorized drone services provider and operates commercially across eleven states, essentially serving public sector organizations. The company operates an on-demand drone delivery network that matches their database of more than 10,000 Federal Aviation Administration (FAA) certified pilots to missions. Notably, DroneUp was the first operator to use the FAA 107.39 waiver that enables delivery flights to be conducted over people and moving vehicles. DroneUp’s high technological expertise and commitment toward ensuring high levels of safety makes it a suitable partner for Walmart in its quest to ramp up drone delivery services.

Walmart already has the sufficient infrastructure in place to support the expansion of drone deliveries. This includes 4,700 stores stocked with more than 100,000 of the most purchased items, located within 10 miles of 90% of the U.S. population. Management highlighted that its unique infrastructure enables both airborne and ground-based drone deliveries. Combining DroneUp’s capabilities with Walmart’s strong retail footprint and sturdy logistics operations, management visualizes that drone deliveries at scale are within reach. In the coming months, the company plans to carry out its first drone delivery operation at a store in Bentonville, AR. Prior to this, Walmart carried out trial drone deliveries with Zipline and Flytrex.  

Delivery systems have evolved into a key aspect of retail operations and Walmart has remained proactive in incorporate evolving technologies in this arena.  In fact, the company identifies that autonomous technologies can elevate retail operations to next level. Apart from exploring drone deliveries, Walmart is venturing into self-driving cars to expand last mile delivery ecosystem. In April 2021, Walmart made an investment in San Francisco-based autonomous-vehicles company — Cruise. Such move along with the latest investment in DroneUP is likely to raise the company’s delivery game. This will strengthen Walmart’s position amid growing competition from Amazon (AMZN - Free Report) , which is also venturing into drone deliveries.

Zacks Investment ResearchImage Source: Zacks Investment Research

Wrapping Up

Walmart has long been undertaking investments, collaborations and acquisitions to strengthen its delivery capabilities. Furthermore, the company’s store and curbside pickup options add to customers’ convenience. As of first-quarter fiscal 2022, Walmart U.S. had 3,800 pickup locations and more than 3,200 same-day delivery stores. Apart from these, the company has been expanding merchandise assortments and adopting compelling pricing strategies. Such efforts have boosted consumers’ shopping experience and helped the company maintain its position as a preferred supermarket destination. Markedly, this Zacks Rank #2 (Buy) stock has increased 4.5% in the past three months compared with the industry’s rise of 4.2%.

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