The trend: Walmart and Amazon are determined to take drone delivery mainstream.

• Walmart is bringing drone delivery to five more cities—Atlanta, Houston, Charlotte, Orlando, and Tampa—building on its existing operations in Arkansas and Texas. That makes it the first retailer to offer the service in five states.
• Amazon recently received FAA approval to deliver a wider array of electronics including iPhones, AirPods, and Ring doorbells via drone. That brings the total number of products that qualify for the service to 60,000—but availability is confined to eligible areas of Texas and Arizona.

The opportunity: The two retailers’ bullishness on drone delivery reflects their view that the service is necessary to offer more convenience—and consequently more value—to customers.

On the one hand, it makes sense: Drones can speed up delivery times considerably, making them a useful option for consumers in urgent need of items like baby wipes or milk. Walmart’s average delivery time is currently under 19 minutes, according to its delivery partner, Wing, while Amazon gives itself a more generous delivery window of 60 minutes or less.

But the technology is hampered by physical limitations. Both Walmart’s and Amazon’s drones have a maximum payload of five pounds, which limits what and how much shoppers can order. The range they can fly is also limited, as is their ability to operate in certain weather conditions. That makes the unit economics challenging—even for companies like Walmart that are relying on third parties to handle the delivery piece.

Our take: It’s easy to understand the sci-fi appeal of drone delivery—but whether it’s feasible remains a question that retailers are still struggling to answer.

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