Is drone delivery doomed? Here’s what DroneUp job cuts mean for industry

It’s been a rough year for DroneUp. In August 2024, news came out that DroneUp would end its drone delivery partnership with Walmart in three states: Arizona, Florida and Utah. With that, DroneUp job cuts occurred. The company laid off about 17% of its staff, which is about 70 employees.

Is this a sign that the drone industry is doomed?

Maybe. As first reported by Axios, DroneUp spends about $30 to deliver a package by drone. For services that promises to bring you your lunch, or other items you want in a pinch like a new backpack for your kid who already tore a hole in theirs, or some sugar because you ran out mid-baking spree, $30 is likely the same or more than the value of the items being delivered. Meanwhile, other companies like Wing and Zipline won’t discuss their costs per delivery — suggesting the competitors aren’t necessarily doing it for much less.

But the outlook is at least brighter for other drone delivery companies that have been generally experiencing growth. That includes the biggest players like Google-affiliated Wing, as well as Zipline, which is generally considered the world’s biggest drone delivery company. Smaller players like Flytrex and Manna also bring fresh industry ideas and small wins to the table.

Reasons to be optimistic about drone delivery

Flytrex doesn’t have a ton of flights to its name, relative to some of the competitors. For example, Zipline crossed the 1 million drone delivery milestone in 2024. That’s through a combination of deliveries including food from restaurants and medical supplies.

Competitors are scaling drone deliveries big time

In the early days of drone delivery, companies would report on one-off drone deliveries. Visual observors would have eyes on the drone at all times, and it would be a highly choreographed, personalized process.

Of course, that’s not sustainable. The more automation, the better (and cheaper). And to enable that, companies will truly need to be able to fly beyond visual line of sight (BVLOS) — which is not fully legal yet.

DroneUp did put out a bizarre news release in 2024 announcing that it “has achieved a new industry benchmark of 500 deliveries made in a single day.” It’s all a bit odd, considering we know competitors like Wing have long been capable of much more. For example, just about this time last year, Wing told us it was making close to 1,000 deliveries in a region in a single day.

The FAA is issuing some BVLOS approvals (though not necessarily to DroneUp)

Speaking of BVLOS, some companies do have authorizations. In fact, the FAA in July 2024 authorized both Wing and Zipline to conduct commercial drone flights without visual observers in the same Dallas-area airspace. That’s a first for U.S. aviation.

It also means the two companies can now deliver packages without actually stationing humans along the route to maintain eyes on the drone — something other companies still need to do in the U.S. to comply with Part 107 rules around visual observers.

Restaurants like it for marketing

Some companies like Flytrex focus solely on delivering restaurant meals via drone. Flytrex restaurant partners include Little Caesars, Charleys Philly Steaks,  Brinker International (which is the parent company of major chains including Chili’s Grill & Bar and Maggiano’s Little Italy) and Jersey Mike’s. Sure, Flytrex is much smaller. Its latest milestone — 100,000 drone deliveries made — occurred in July 2024 and is merely a fraction of Zipline’s share.

Google-sibling company Wing also dominates the retail and food delivery space. This summer, Australia got a treat when Wing announced an expansion to the Melbourne area. Wing will partner with DoorDash, which it’s already been working with elsewhere in Australia. In the U.S.,  Wing works closely with Walmart (though so does DroneUp).

What DroneUp needs to do to catch up

These days, DroneUp is solely focused on its Walmart deliveries in Texas, where Walmart also operates with Wing and Zipline. For DroneUp to really be sustainable, it will need to gain that same FAA approval for BVLOS flights already granted to Wing and Zipline.

BVLOS approvals

For now, DroneUp does holds some critical Beyond Visual Line of Sight (BVLOS) waivers issued through the Federal Aviation Administration (FAA), but it’ll still need more autonomy.

More research

For what it’s worth, DroneUp already works closely with the research and development facility at Richard Bland College (RBC). Richard Bland College is the public junior college associated with the College of William & Mary in Prince George County, Virginia. There, academics perform capacity testing on behalf of DroneUp’s commercial partners.

Hardware wins

It’s perhaps tough to compete with Wing, which has the capacity to experiment with all sorts of aircraft prototypes. With products like the Pixel, Pixelbook, Nest, GFiber Webpass, Google Home and more, it’s not surprising that Wing’s aircraft are also impressive hardware feats.

DroneUp in March 2024 launched an all-new, compelling piece of hardware called the autonomous Ecosystem. Its Ecosystem entails a series of operations stations around a region. There, clients (say a retailer) can drop off a package into what’s kind of like a massive mail box. The drone can automatically grab that package and fly off to another station. There, the receiver would roll up to that station and retrieve their package.

DroneUp’s Ecosystem model marks a significant departure from competitors like Wing or Zipline, both of which fly over (and drop off packages) directly to suburban, single-family residences.

DroneUp has said its system is more scalable. After all, there’s no messing around with figuring out which backyards do and don’t work. Plus, it’s generally more cost-efficient and safe. We’ll be following to see how well it works in practice.

Software wins

Software is critical just as much as hardware. For what it’s worth, DroneUp already has its own proprietary software called Uncrew. The cloud-based platform allows users to manage missions from anywhere in the world, using real-time geodata from unmanned traffic management (UTM) systems. By knowing which drones are in the sky, the software can generate accurate airspace, terrain, and traffic information. From there, it can generate automated mission plans. As of now, one operator can oversee up to 20 concurrent missions.

While 20 missions at the time is the figure for now, that figure will eventually have to grow for DroneUp to take the lead as most efficient drone delivery platform. DroneUp leaders say their teams are working on that very thing right now.

“For DroneUp’s commercial partners, the ultimate goal is to increase the number of deliveries that can be safely completed while diversifying the types of items and packages that drones can effectively manage,” said John Vernon, CTO of DroneUp, in a prepared statement. “Testing at RBC will soon address new weight capacities that eclipse our 10-pound limit, further increasing the package size and testing of many-to-many drone operations.”

In light of the DroneUp job cuts, how are you feeling about the state of delivery drones? Share your thoughts in the comments!