Can drone delivery revolutionize retailing? If retailers can rely on drones to get products to consumers, quickly, efficiently, and accurately, in the famously challenging last mile of the delivery process, it seems likely to do just that.

Considering the potential for enhanced efficiency and customer service, it may come as little surprise that Walmart continues to lean in to using such tools. Most recently, it expanded the reach of its drone delivery services to serve three-quarters of the Dallas-Fort Worth (DFW) metropolitan area, earning it the distinction of being the U.S. retailer with the largest drone delivery service operations currently. In the DFW region alone, drone delivery is available to more than 30 towns and municipalities, including an estimated 1.8 million households.

In support of this and further expansions, Walmart has partnered with two separate, external providers of drone delivery services: Wing (which is owned by Google’s parent company Alphabet) and Zipline. Such a strategic partnership arrangement likely encourages competition between these two companies, prompting them to continue seeking out the most advanced technology capabilities and safety features. If either firm can dominate this market and account for the majority of Walmart’s millions of deliveries to millions of customers, it would represent a great success for these service providers. Already for example, both Zipline and Wing have sought and received approval for “beyond the visual line of sight” flights, meaning that their drones are permitted to operate outside any human operator’s actual visual field, thereby greatly increasing the potential delivery area.

Even if the partnerships seem likely to push advances by the service providers, Walmart also remains committed to improving its own technologies, retail logistics, and customer service capabilities. As it increasingly integrates drone delivery into its existing strategies, we could anticipate that Walmart will develop its own internal delivery operations, rather than relying on external partners. Such a move would resonate with the retailer’s essential purpose and constant dedication to streamlining its operations to become more efficient (and thereby support its low price reputation).

The search for ever-greater efficiency also can, when undertaken responsibly, enhance customer satisfaction. For example, shoppers in the DFW area can now order products via Wing’s or Walmart’s apps and request drone delivery in as little as 30 minutes; projections suggest that some deliveries soon will be possible within just 10 minutes. Drone deliveries are less subject to human error (e.g., a delivery driver leaving a package at the wrong address) or regular inconveniences, such as heavy traffic or a lack of parking options, such that they promise to be more accurate, as well as faster. Accordingly, customers already have embraced drone delivery, especially for food and beverages, and express satisfaction with the ease of use it offers.

Despite the appeal of drone delivery for both retailers and consumers though, safety concerns continue to temper expectations. Whereas federal-level approval exists for drone deliveries, some states and municipalities have imposed stricter regulatory policies for uncrewed aircraft. Not all customers have had sufficient time or experience to develop trust in the reliability and safety of drone technology. Some skeptical citizens even have shot down drones making deliveries to their neighbors, suggesting a deep-seated mistrust that retailers will have to overcome.

Furthermore, multiple unintended, unknown, and difficult-to-predict outcomes are likely to arise as drone deliveries scale up, such as environmental and privacy considerations. Drones’ long-term viability also depends on supply-side factors, including technological advancements. Yet Walmart shows no signs of stopping, regardless of such potential challenges. It recently announced plans to expand its drone delivery services nationwide.

Discussion Questions

1. Would you try drone delivery services? Why or why not? What factors would inform your choice?
2. Walmart already has gained a competitive position in the U.S. drone delivery market. How should other retailers respond: Partner with existing drone delivery services? Develop their own drone delivery operations? Avoid drones altogether and seek other delivery options?

Sources: David Fuller, Bryan Logan, Pollo Suarez, and Aneliya Valkova, “How Retailers Can Attract and Retain Frontline Talent Amid the Great Attrition,” McKinsey & Company, August 17, 2022; Marianne Wilson, “Study Reveals Why Retail Employees Don’t Stay on the Job Very Long,” Chain Store Age, August 30, 2023; OpenAI ChatGPT, “Assistance with Research on High Turnover Rates in Retail,” ChatGPT, April 22, 2024; “Why Retail Turnover Rates are So High and How to Improve Them,” Zipline, July 30, 2022.