Walmart has canceled drone delivery services in Phoenix (Arizona), Salt Lake City (Utah), and Tampa (Florida), operated in partnership with drone-based delivery services provider DroneUp, due to sustainability challenges in these locations.

DroneUp will close 18 delivery hubs in these cities, resulting in a 17% workforce reduction (70 employees). It will now focus on expanding operations in the Dallas-Fort Worth (Texas) area.

Currently, drone deliveries cost about USD 30 per package, with DroneUp aiming to reduce this cost to under USD 7 for scalability. 

Analyst QuickTake: DroneUp has been a long-time partner of Walmart, with partnerships dating back to 2020 for delivering Covid-19 at-home self-collection kits in various areas. The duo expanded its partnership to extend delivery services to 30+ selected Walmart stores across Arizona, Arkansas, Florida, Texas, Utah, and Virginia in May 2022, aiming to reach up to four million households—which we today see scaled back. Walmart also has partnerships with other drone-based delivery service providers such as Alphabet’s Wing, Zipline, and Flytrex to provide drone-based deliveries in regions including Dallas-Fort Worth and Fayetteville (North Carolina).