Walmart, a pioneer in remote aerial package delivery, has just launched its first drone delivery service in the Dallas-Fort Worth area.  The company began deliveries a week ago at 11 of its store outlets in Dallas and several nearby towns including Garland, Murphy, Richardson and The Colony.  It’s the company’s first foray into Texas after successful launches in three other states – Arkansas, Arizona, and Florida.  Walmart plans to add Utah and Virginia for a total of 34 sites by early 2023.   But its investment in Texas is its largest – and most ambitious – thus far.

Walmart chose Texas for good reason. The state has far and away the most Walmart stores in the nation – 601, about 13% of the total – and the most drone sites being tested.  It’s also an unusually drone-friendly state – with strong support from its governor and a rapidly expanding drone job market.  Assuming Walmart succeeds in Dallas-Fort Worth, these conditions will leave the company well-positioned to expand its drone delivery service statewide in the coming years.

Walmart’s remote delivery service is similar to that of its competitors, especially Amazon, which has similar outsized ambitions.  But few can rival the volume and range of goods Walmart offers for drone delivery, everything from eggs to tampons and even smaller kitchen appliances and utensils – more than 10,000 store items total.   The main limitation is the payload – just 10 lbs., but that’s twice the allowable weight for Amazon’s drone service, which is still struggling to get off the ground.

Walmart’s drones also have the advantage of delivering packages more directly to their customers, either by landing in a backyard or driveway or by lowering customer packages to the ground with a cable.  Other companies are still planning to rely on parachutes leaving delivery to the vagaries of the wind.

It’s not clear how many of Walmart’s customers actually qualify for remote service. Because of limited drone battery power – and current FAA regulations – the company’s drones can only reach customers living within a one-mile radius of the 11 stores. For customers further out, the drones may have to drop the packages at designated Walmart reception sites – including participating convenience stores – for pick-up by the purchaser.

Walmart has been experimenting with drones for years but first deployed them in warehouse supply and inventory management.  Then, in 2020, the company began experimenting with drone deliveries of Coca-Cola products in Georgia and COVID-19 vaccination kits in North Carolina.  Success with those pilots  led to the launch of its current 6-state initiatives, which began last year with a handful of Walmart stores located near its corporate headquarters in Arkansas

Walmart may enjoy another competitive advantage over Amazon and other remote delivery companies that have encountered sharp growing pains with drones.  Almost from the start, the company decided against developing an in-house drone capability.  Its technology partner, DroneUp, which it formally acquired as a subsidiary last year, manages all of the company’s drone operations semi-autonomously, including packaging and delivery, one reason, analysts say, Walmart’s new and expanding service has launched without a hitch.

With its current capacity, the company estimates it can reach 4 million Walmart households next year.  That’s still just a tiny share – about 2% –  of all Walmart shoppers, estimated at over 200 million weekly.  But the company sees its drone service expanding rapidly once its current experiments prove their value. With over 4,700 stores nationwide,  U.S. consumers, on average, live less than 10 miles away from any Walmart outlet.   That means as drone regulatory restrictions begin to ease – for example, with expanded FAA authority for longer, fully autonomous flights – the company will be far better positioned than its rivals to meet growing consumer demand.  Starting, perhaps, with its expanding base in Texas.