Wal-Mart joins Amazon, Google in race for delivery-by-drone

[NEW YORK] Wal-Mart Stores, the world's largest retailer, wants to test drones for delivering products, entering a race with online competitors Amazon.com and Alphabet's Google.

Wal-Mart on Monday asked the US Federal Aviation Administration for a waiver to test drones outdoors, with a goal of eventually using them to deliver goods to consumers.

"Wal-Mart's distribution system could become more efficient and consumers could be better served, benefiting the public interest," the company said in its application. It has already been experimenting indoors where it doesn't need government approval, according to its filing with the agency.

The company also wants to use drones to assist with tracking merchandise, such as taking inventory of trailers outside its distribution centers, according to the filing. Wal- Mart will have to wait until it does further testing before it can determine if or when drones will become part of its daily operations, spokesman Brian Nick said.

The FAA has issued more than 2,000 waivers to businesses that want to use drones for photography, aerial surveillance, inspections and other purposes. So far, the approvals have been for low-altitude flights within sight of the operator and away from bystanders, making it impossible to use for delivering products to people's homes.

Companies such as Amazon and Google also have been testing drones designed to deliver small packages to people's homes, a concept that both have said is still years away. While FAA is finalizing regulations allowing more widespread commercial drone flights, it must craft an entirely new set of rules permitting the long-distance, robotic flights required for deliveries.

Wal-Mart has been trying to play catch up with Amazon in the delivery space, opening a new network of online fulfillment centers to speed delivery times and testing its own subscription shipping service, like Amazon Prime. It has also been pushing in-store pickup, where customers can order an item online and have it ready for pick up at their local Wal-Mart.

As growth slows in the US, Wal-Mart has been investing heavily in its online operations, opening offices in Silicon Valley with more than 2,000 programmers and engineers. Wal-Mart expects profit to fall as much as 12 percent next year as the retailer spends an additional US$1.5 billion on higher wages for its workers and continues investing heavily in its web operations.

Wal-Mart shares have fallen 32 per cent this year as investors have grown impatient with the company's slow growth.

The application outlined several types of drone tests Wal-Mart wants to conduct, including delivering groceries in a parking lot outside a store and launching a drone from a truck to deliver packages to nearby homes. About 70 per cent of the US population lives within five miles of a Wal-Mart stores, according to the company.

The FAA has fast-tracked drone waiver applications it concludes are similar to previous ones it has granted. If the Wal-Mart application has new features, the agency may take additional time determining whether it meets safety requirements.

Wal-Mart plans to test two models from SZ DJI Technology Co, the Chinese company that is the world's leading manufacturer of small civilian drones.

BLOOMBERG