Drones have been the outlier in retailers’ quest to solve last-mile delivery. Bogged down by Federal regulations and the hurdle of shifting consumer behavior, they’ve been slow to get off the ground. Not anymore. An ever-increasing number of retailers are adding drones to their portfolio of last-mile options, and shoppers are on board.
When it comes to key points along the fulfillment chain, last-mile delivery is critical. And it’s a puzzle retailers have been trying to solve for some time. But drones offer a solution — especially for suburban and rural areas in the U.S.
Already in use in China and elsewhere, drones have been hurdled in the U.S. by regulations, which is mostly due to the immensity of private aircraft in the country. Things are changing, though, as the FAA changes recommendations while retailers such as Walmart increase investments and tout the sustainability of drones.
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During a panel at the NRF Big Show titled, “But will it fly? The lowdown on drones,” Deborah Weinswig, chief executive officer of Coresight Research, led a panel on the topic. She was joined by Yariv Bash, CEO and cofounder of Flytrex; Harlan Bratcher, global business development head of JD Fashion at JD.com, and David Guggina, executive vice president of supply chain operations at Walmart.
Bratcher kicked off the conversation by talking about the differences between China and the U.S. and how private aviation in the U.S. is so prominent and had served as a barrier to the full deployment of drones. He also noted that drones in China are not for urban delivery. “We use it for big, regional delivery,” he said. “Some of our drones, for example, have one-ton payloads. That’s an aircraft. That’s not a drone. That’s a big delivery vehicle.”
At Walmart, Guggina said the retail giant recently announced “that we’re expanding our drone operation to 34 additional hubs, which brings us to 37 hubs in seven states and 26 different municipalities. Regarding the number of deliveries, we’ve upped it by 6,000 deliveries a day. So this is just starting.”
Guggina said the demand curve will steepen “as the technology ramps in the U.S., and as the regulations with the FAA changes, and allows us to move forward. You’re going to see it impact financial growth, and then it will find its place as a modality within our supply chain.”
Weinswig noted that there are more than 80 million backyards in the micro suburbs of the U.S., which is why this is such an interesting market for Walmart. She asked Guggina where the company is seeing demand and if it’s true that demand is greatest the further away a customer is from a store. He said yes, and noted that drones offer “amazing solutions” that are popular with shoppers and also more cost-effective.
Regarding the popularity of drones, Bash said customers take selfies and make TikToks of drones delivering goods to their homes. Drone drop-offs have become social media moments.
Guggina said delivering goods to customers “is just one way that we’re going to utilize drones in the future.”
“The dispense of those is obviously important in that piece, but the retrieval is also going to play a role,” he explained. “We are working with multiple partners that utilize mailboxes. Imagine a world where you have a return that comes back to a Walmart Supercenter after it is picked up by a drone because that drone delivered medicine or delivered lunch for you and your family.”
Guggina said as the company thinks about “services and safety and servicing the community — Walmart exists to serve.” And that means drones at Walmart delivery hubs can do more than drop off or pick up goods.
“Our purpose is to save people money so that they can live better lives,” he explained. “And part of living better lives is supporting communities. Drones for merchandise goods and consumables have peak demand at certain periods of the day. So that means the [drone] hub has capacity at other times of the day, and there are alternative ways that we can utilize the drones in emergency response for the communities we’re servicing. It could mean cell tower inspections, for example. These hubs, their purpose is to serve customers, but they will also benefit the communities that they reside in.”