Walmart testing drones

Walmart (NYSE:WMT) has been privately testing drones inside facilities and is now seeking permission from federal regulators to test them outdoors for various uses, including home delivery.

The retailer has been testing the unmanned aircraft indoors for months. Now, it wants to expand those tests outside, but needs the Federal Aviation Administration's permission to research use in "deliveries to customers at Walmart facilities, as well as to consumer homes," according to an application submitted to the FAA and reviewed by Reuters.

Delivery isn't the only use case being considered for drones. The aircraft also help monitor the grounds surrounding warehouses and can boost supply chain efficiency.

"Drones have a lot of potential to further connect our vast network of stores, distribution centers, fulfillment centers and transportation fleet," Dan Toporek, Walmart spokesperson, told Reuters. "There is a Walmart within five miles of 70 percent of the U.S. population, which creates some unique and interesting possibilities for serving customers with drones."

Operational efficiency is critical at Walmart and has long been key to the retailer's ability to maintain everyday low prices. Reducing costs on the back-end become even more important in the digital retail environment, which includes instantaneous price matching and routine free shipping.

Other use cases mentioned in Walmart's application with the FAA include using drones for grocery pickup services, a program now being tested in 23 markets and marked by management for rapid expansion, and home delivery in small residential neighborhoods. The plan is to deploy drones from a delivery truck.

Commercial drone use is illegal, but the FAA is working toward establishing rules that would change that sometime in the next year. In the interim, companies can apply for exemptions and there are currently more than 2,100 exemptions for commercial drone testing and use in the United States.

Amazon (NASDAQ: AMZN) announced the development and testing of drones for home delivery in 2014, capturing a good part of the news cycle leading into Cyber Monday. Google, too, is testing the devices. 

While much of the focus has been on whether drones can be used safely in dense metropolitan areas, the true benefits may be more behind the scenes, if Walmart's early efforts are any indication.

For more:
-See this Reuters report

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