Walmart announced its investment in Virginia-based drone solutions provider DroneUp (value undisclosed). The two companies plan to start drone-based delivery services from a Walmart store in Bentonville, Arkansas, in the coming months. 

DroneUp intends to utilize the funds to develop a scalable last-mile delivery solution, including building infrastructure for flight and logistics systems, partnering with drone manufacturers, expanding the team, and making strategic acquisitions.

DroneUp is a drone startup working on aerial data collection and processing, drone-based deliveries, pilot flight services, and commercial and public sector sales. It first partnered with Walmart and Quest Diagnostics, a clinical laboratory,  in September last year to deliver Covid-19 at-home self-collection kits in northern Las Vegas, Nevada, which later expanded to include Cheektowaga, New York (October), and El Paso, Texas (November). Walmart and DroneUp conducted another pilot with Coca-Cola for deliveries to selected Walmart customers in Coffee County, Georgia.

Analyst quick take: Prior to this investment, DroneUp has been a smaller startup in the drone-based delivery space, with only USD 2.3 million in funding raised in 2016. Walmart has been running various other drone-based delivery trials with larger drone delivery startups such as Zipline (in Northwest Arkansas) and Flytrex (in North Carolina). Walmart’s backing signals the strong growth potential of DroneUp and validates the success of several pilot operations (mentioned above) the company has completed to date.