This story first appeared on flyingmag.com.
DroneUp, the company powering drone delivery for the largest retailer in the world, has trimmed its head count.
According to a CNBC report citing two unnamed people who lost their jobs, the Walmart partner began cutting jobs across the company and informing staffers they were let go Monday morning. DroneUp CEO Tom Walker did not specify the number of cuts but told FLYING magazine they represented “a small percentage of the team.” He said the firm’s head count now stands at 418.
According to Walker, the layoffs represent a strategic part of the company’s shift away from “enterprise” services — such as construction, real estate inspections, aerial data capture and marketing — and toward drone delivery of items like paper towels, ice cream and rotisserie chicken.
“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 and other drone services out of our hubs,” he said.
Walker also claimed that, over the next six months, DroneUp “will hire more people than were laid off,” owing to increased growth in the drone delivery business. The implication is that the company may establish new positions within the drone business, particularly at its hubs, the bases of operation for its services. DroneUp operates 36 hubs out of Walmart stores.
It’s unclear exactly which teams were affected by Monday’s layoffs, but LinkedIn offers some clues. According to posts by former DroneUp employees this week, the company fired its head of unmanned aircraft system (UAS) flight training, a flight engineer, a development services engineer and a UAS flight instructor.
Two marketing managers, two business analysts and the director of business development also appear to be included in the cuts, per LinkedIn posts.
Though layoffs are rarely a positive indicator, DroneUp’s appear to be relatively small. The Virginia Beach, Virginia-based company is also not the only drone firm to trim head count in recent months.
In January, Amazon’s Prime Air drone division was hit with “significant” layoffs as part of a companywide head count reduction. Around the same time, Wing, the drone delivery arm of Alphabet, was impacted by job cuts affecting the broader business. Since then, Amazon’s drone network has stagnated while Wing appears to be on track.
It’s difficult to say what DroneUp’s outlook will be. The Walmart-DroneUp network is coming off a record year that saw it expand to seven states and complete more than 6,000 deliveries. Recent partnerships with Iris Automation and Wonder Robotics should eventually enable beyond visual line of sight (BVLOS) services — which will help it scale further.
Currently, Walmart and DroneUp operate within a 1.5-mile radius of their store-based hubs. Increasing that range could go a long way toward expanding the market for those services and increasing demand.
All of that depends on BVLOS-enabling technology being tested and approved by the Federal Aviation Administration and other entities. But clearly, delivery — and expanding the capabilities of hubs — is where the company’s focus will be moving forward.