Retail giant asks for FAA permission to test package delivery, inventory management using unmanned aircraft

Wal-Mart is seeking to use drones made by China’s SZ DJI Technology, including the DJI S900. PHOTO: CHIP CHIPMAN/BLOOMBERG

By SARAH NASSAUER and JACK NICAS

Updated Oct. 26, 2015 11:17 p.m. ET

 

Wal-Mart Stores Inc. is getting in on the drone game.

The world’s largest retailer by revenue asked the Federal Aviation Administration in a letter for permission to use outdoor unmanned aircraft to test everything from package delivery to inventory management. To date, drone tests “have been strictly limited to indoor tests,” the retailer said in the letter, which was submitted Monday.

Wal-Mart’s interest in drones comes about two years after a similar test was announced by Amazon.com Inc., and amid mounting interest from industries such as farming, filmmaking and construction to explore the potential for drone use in their businesses. Google parentAlphabet Inc. and Deutsche Post DHL AG have also tested drones for the final leg of package delivery, which is often the most inefficient and expensive part of logistics.

The FAA has issued more than 2,000 approvals in the past year to use drones commercially and the agency has recently accelerated such approvals. That bodes well for Wal-Mart’s application because the agency has also approved hundreds of companies to use the Chinese-made drones that Wal-Mart is seeking to test.

The retailer is seeking to use drones made by SZ DJI Technology Co. of Shenzhen, China, the world’s largest drone maker, including the $1,260 DJI Phantom 3 and the roughly $3,500 DJI S900, according to the letter.

The FAA currently requires its approval for commercial drone flights until new rules are finalized next year that are expected to pave the way for widespread commercial-drone use.

Wal-Mart’s plans to test drones were first reported by Reuters.

The public plans for delivery drones by Amazon and Alphabet have generally been limited to flights between distribution centers and customers’ homes. But Wal-Mart proposes two unusual ways to deliver with the devices: ferrying items from stores to customers’ cars in the parking lot, and deploying drones from neighborhood delivery trucks to drop packages at customers’ homes.

Wal-Mart wants to test drones to develop a more efficient way to monitor from the air the flow of products between its warehouses and delivery trucks as it shuttles goods around its U.S. stores. About 120,000 products are sold in the typical Wal-Mart Supercenter.

The test is part of Wal-Mart’s plan to make a high stakes pivot from a slow growing retail behemoth largely dependent on sales and profits from about 4,600 U.S. stores to a more nimble e-commerce player that uses data and technology to drive sales. The retailer plans to invest $2 billion this fiscal year and next to boost online sales, as it strives to fend off rapidly growing online retailers like Amazon.

Earlier this month, Wal-Mart surprised investors with news that profits could fall as much as 12% in fiscal year 2017, putting the company’s stock on track for its worst year since 1973.

 

Source: http://www.wsj.com/articles/wal-mart-plans-outdoor-drone-tests-1445899727