This Is The Drone Company Walmart Is Hoping To Use For Deliveries
Frank Wang Tao leads the world’s largest consumer drone company in DJI, which is currently raising money at a $10 billion valuation. (Photo: David Hartung For Forbes)
DJI founder and CEO Frank Wang sprawls out underneath one of his company’s Inspire drones. Walmart said on Monday that it was planning to experiment with DJI devices for drone delivery. (Photo: David Hartung For Forbes)
The world’s largest retailer is hoping to work with the world’s biggest consumer drone manufacturer.
On Monday, Walmart said it filed paperwork with the Federal Aviation Administration to test outdoor drone delivery with devices made by China’s SZ DJI Technology Co. In documents first reported by Reuters, the retailer explained that it wants to research ”deliveries to customers at Walmart facilities, as well as to consumer homes” and that it had already experimented with unmanned aerial vehicles (UAVs) at its indoor facilities.
While Walmart is a household name, its foray into drone delivery shines a spotlight on DJI, a 9-year-old company that has dominated the nascent consumer UAV industry but is little-known outside drone circles. Valued at $8 billion based on a round of venture funding in May, DJI controls more than 70% of the consumer drone market based on some analysts’ estimates by selling devices like its popular Phantom 3, a camera-bearing quadcopter that costs less than $1,000.
“We are very excited to see Walmart exploring this space,” said DJI spokesman Michael Perry in a statement to FORBES. “Our uniquely high-performance, easy-to-use and affordable aerial technology continues to make DJI the leading choice for businesses and consumers that want to develop innovative unmanned aerial applications.”
Though Perry said that there was no formal partnership between the two companies, Walmart’s use of DJI devices represents a unique opportunity for the Shenzhen-based company, whose products are typically used by consumers and small businesses for imaging or video purposes. On track to do more than $1 billion of revenue in 2015, the company has stayed away from devices that are specifically tailored to logistics and package transportation, an area that has been heavily touted by technology giants including Amazon.com AMZN +1.48% and Alphabet. (Read FORBES’ in-depth profile of DJI and founder Frank Wang from May here.)
Sources close to DJI said that the company has no immediate plans to move into specific delivery UAV development, but noted that Walmart’s use of its UAVs represents a unique and organic industrial opportunity from a big name customer. In its filing with the FAA, which was not available online as of publishing time but was reviewed by Reuters and The New York Times, the Bentonville, Ark.-based retailer said it was seeking to experiment with the Phantom 3 and S900, a $3,800, six-propeller drone that is often employed in professional camera shoots. The FAA currently bans the commercial use of UAVs, though companies can apply individually for exemptions.
“You can envision a scenario where a drone is at one of our million-square-foot distribution centers, and it can fly through the center and do inventory work,” Walmart spokesperson Dan Toporek told The Times. “And we’re thinking, can we fly something from one distribution center to a fulfillment center, or to a store?”
It’s unclear how Walmart plans to specifically use DJI’s products, but one could speculate that light payloads could be strapped to the S900, which is built to carry professional camera rigs. There’s also the possibility of using UAVs within and around Walmart’s warehouses to scan inventory with unique barcodes or ID tags, something that Perry noted was already being done with DJI products by a South African startup called DroneScan.
In the U.S., DJI drones have been employed for the majority of commercial applications, with 66.1% of all FAA-approved uses coming for DJI models according to agency data pulled by data publishing company Silk. To date, the FAA has approved more than 2,100 exemptions, the majority of which are related to imagery and mapping. Very few exemptions were granted for drones carrying payloads, though Perry pointed to examples where his company’s drones have been used to fly specific cell phone sensors or life jackets in rescue situations as examples of drones carrying objects.
Some familiar with the industry, however, expressed skepticism of Walmart’s plans, noting that the company’s announcement was potentially a move to show that it wasn’t falling behind.
“It’s wonderful for the [public relations] and image of the company,” said Kespry CEO Paul Doersch, whose startup develops commercial drones for construction and surveying operations. He pointed to Amazon CEO Jeff Bezos’ announcement of its UAV program on 60 Minutes in late 2013 as something that garnered plenty of attention for the online retailer. “Which drone [Walmart is] using is really besides the point,” he added. “They’re just trying to be part of the club.”
Doersch noted that Amazon did follow up on its lofty proposals and lauded the company for committing manpower, resources and lobbying efforts to its Prime Air program, which proposed specific drone delivery rules at a NASA conference in July. It remains to be seen whether Walmart will have the same level of commitment, he said, adding that the company’s use of “hobbyist components” from DJI show that the world’s largest retailer by revenue is still in the “very early days” of its experimentation.
For DJI, however, the name association with Walmart will be powerful as it looks to establish itself outside of the pure consumer market. Sources close to the company said that Walmart may not be the only global retailer interested in using DJI’s technology for delivery and suggested that names like India’s Flipkart have reached out to the drone manufacturer.
Perry declined to comment on specific names, but noted that the company receives plenty of inbound interest from firms looking to test drone delivery.