DroneUp, a Walmart-partnered startup, is laying off workers despite the race to dominate the drone delivery market. This move was confirmed on Monday by two individuals who were let go and asked to remain anonymous.
Established in 2016, DroneUp has a fleet of quadcopter-style drones, built to handle the last-mile delivery, transporting items like clothes, medication, and food from the warehouse to your front door.
This layoff is part of a tech industry trend and DroneUp's shift towards focusing on its delivery hubs across the U.S. The company is pulling back from enterprise services such as construction and real estate monitoring, aerial data collection, and marketing, according to the ex-staffers.
Confirming the layoffs and strategy shift, DroneUp stated that only “a small percentage of the team,” now 418-strong, were affected.
“After tremendous consumer adoption of our drone delivery services, we have made the decision to shift our business model to align our company structure around the continued growth and success of drone delivery,” CEO Tom Walker told CNBC.
DroneUp also mentioned plans to hire more staff in the next six months than those laid off.
DroneUp, along with other startups like Zipline and Flytrex, has been on a three-year partnership with Walmart to deliver lightweight goods within 30 minutes. As of January, 36 Walmart stores in the U.S. offered this service.
UPS, Amazon, and Alphabet's Wing unit are also at various stages in creating their own drone delivery services.
However, commercial drone delivery scaling in the U.S. has been slow, due to technical issues and a lengthy approval process with the Federal Aviation Administration. Yet, several companies have been permitted to test drone deliveries in selected markets, provided they pose no significant safety risks.
This year's economic downturn has also hindered some drone delivery operators. For instance, Amazon in January laid off a significant number of employees from its Prime Air drone delivery unit as it was about to start flying packages to customers in two small U.S. markets.
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