Walmart and DroneUp have ended their last-mile drone delivery partnership months after the companies scaled back their collaboration.
The contract between the retail giant and the drone delivery company has expired, both companies confirmed. Along with the contract expiration, Walmart is no longer an investor in DroneUp, according to a report from Axios.
“We are excited about the momentum and positive customer response we’ve experienced around drone delivery,” said a Walmart spokesperson. “This service will continue to evolve as we learn more about customer preferences and drone capabilities, and by focusing our efforts in Dallas-Fort Worth, we can learn more about the potential to scale this innovative delivery option for Walmart’s customers.”
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Walmart and DroneUp had operated together in four major metropolitan areas through much of 2024: Dallas-Fort Worth; Phoenix, Salt Lake City and Tampa, Fla. But the mass merchant determined it would focus its efforts exclusively on Texas in August, suspending drone delivery offerings at the other three locales.
Prior to the contract expiration, the companies also offered drone delivery near their respective headquarters in Bentonville, Ark. and Virginia Beach, Va.
Walmart first partnered with DroneUp in 2020 to launch trial deliveries of at-home Covid-19 self-collection kits from the retailer’s stores. After “hundreds of successful deliveries,” Walmart invested with the delivery company the next year.
“We value the lessons learned while working together and will apply those learnings to our operations in the future,” a DroneUp spokesperson said in a statement. “As of today, our contract and operations together have come to an end. We remain optimistic about the future of drone delivery.”
Walmart’s drone deliveries will continue via its partnerships with collaborators like Flytrex, Wing and Zipline, the latter two of which are still shipping for the retailer throughout the DFW area.
Dallas-Fort Worth was built up as a drone delivery home base of sorts for Walmart to kick off 2024. The company announced last January that it already had scaled drone delivery up to 75 percent of the population in the wider metro area across more than 30 towns and municipalities.
As part of that statement, Walmart said the drone deliveries could get items to shoppers in 30 minutes or less, with some deliveries happening as fast as 10 minutes.
The future for DroneUp without Walmart as a backer and deployer of its technology is uncertain, although the company’s services extend to deliveries across medical and healthcare products, groceries and quick service restaurants.
In November, the drone delivery provider got the necessary go-ahead from the Federal Aviation Administration (FAA) to make everyday customer deliveries by drone, becoming the sixth U.S. drone operator to receive a Part 135 air carrier certificate.
With this certification, DroneUp can now operate its delivery drones to carry packages beyond the visual line of sight of the operator—which would have been essential to the Walmart partnership in Dallas-Fort Worth.
Part 135 grants DroneUp the authorization to fly beyond this line of sight to an expanded delivery radius up to five miles, which the company says allows for a 300 percent increase in households serviced.
Government regulation had been a hurdle to scaling drone delivery operations for years, whether it be at Walmart or a competitor like Amazon, which itself has had drone-related hiccups of its own. But it seems that getting these projects off the ground—literally—is now more of a concern about cost-benefit analysis.
When Walmart had cut down the operations in the non-DFW sites, DroneUp CEO Tom Walker told Axios that consumer demand was too small for drone delivery to be sustainable in those areas.
In August, Walker said it costs DroneUp about $30 to deliver a package by drone—four times the company’s goal to bring down these costs to $7 per delivery.
At the time, the paring back of the program resulted in the closure of 18 Walmart delivery hubs in Phoenix, Salt Lake City and Tampa. Additionally, 70 employees were laid off after these delivery centers were scrapped.
DroneUp declined to reveal whether more employees have been laid off in the wake of the Walmart partnership’s dissolution.
According to 2024 research from PwC, drones are completing about 14,000 deliveries a day globally, totaling 5 million-plus throughout the year and moving $250 million of goods. In 10 years, PwC estimates those numbers will soar to 800 million deliveries a year, with a value of $65 billion.
