Amazon and Walmart's emerging delivery drone battle escalates with Zipline deal

Key Points

• Walmart is partnering with drone delivery unicorn Zipline to make on-demand deliveries of select health and wellness products in the U.S. early next year.
• It's the second recent delivery drone deal for Walmart at a time when retail rival Amazon has received FAA approval to test its own Prime Air delivery drones.
• It also follows Walmart's attempt to counter Amazon Prime with its own membership offering, Walmart+, which debuts Tuesday and costs $98 a year.

Walmart announced Monday that it's partnering with Zipline — a company best known for its medical drone operations in African countries like Ghana and Rwanda — to launch a delivery service of select health and wellness products in the U.S. The company says its intention is to later expand the partnership into offering drone delivery of general merchandise.

This follows last week's news that the retail giant would run a pilot project for delivery of grocery and household products through automated drones with end-to-end delivery firm Flytrex. Walmart has accelerated the expansion of its pick-up and delivery services in the face of the Covid-19 pandemic, as virus-wary consumers increasingly prefer having items delivered at their doorsteps.

"We'll never stop looking into and learning about what the next best technology is and how we can use it to better serve our customers now and into the future," said Tom Ward, Walmart's senior vice president of customer product, in a statement.

Amazon recently received U.S. Federal Aviation Administration (FAA) approval to operate its fleet of Prime Air delivery drones, which will allow the company to expand unmanned package delivery. The certification comes under Part 135 of FAA regulations, which gives Amazon the ability to carry property on small drones "beyond the visual line of sight" of the operator. 

Walmart's drone deals also follow its attempt to counter Amazon Prime with its own membership offering, Walmart+, which debuts Tuesday and costs $98 a year.

Zipline recently made a medical delivery deal in the U.S. as a result of Covid-19. In May, the FAA granted Novant Health the authority for contactless distribution of personal protective equipment (PPE) and critical medical supplies to frontline medical teams in the Charlotte, North Carolina metro area, via Zipline-operated drones.

Zipline, which ranked No. 7 on the 2020 CNBC Disruptor 50 list, is a California-based drone-delivery unicorn best known for transporting critical medical supplies such as blood and vaccines in Rwanda and Ghana. At the outset of the pandemic, the company began delivering Covid-19 test samples. To date, the company has delivered more than 200,000 medical products to thousands of health facilities serving more than 20 million people across multiple countries.

Trial deliveries will take place near Walmart's headquarters in Northwest Arkansas using Zipline's technology and are expected to begin in early 2021.

"Zipline will operate from a Walmart store and can service a 50-mile radius, which is about the size of the state of Connecticut," Ward said in the statement. "And, not only does their launch and release system allow for quick on-demand delivery in under an hour, but it also eliminates carbon emissions, which lines up perfectly with our sustainability goals."