Exclusive: Wal-Mart seeks to test drones for home delivery, pickup

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Wal-Mart: Drones Could Be Used for Deliveries

Wal-Mart Stores Inc applied Monday to U.S. regulators for permission to test drones for home delivery, curbside pickup and checking warehouse inventories, a sign it plans to go head-to-head with Amazon in using drones to fill and deliver online orders.

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The world's largest retailer by revenue has for several months been conducting indoor tests of small unmanned aircraft systems -- the term regulators use for drones -- and is now seeking for the first time to test the machines outdoors. It plans to use drones manufactured by China's SZ DJI Technology Co Ltd.

In addition to having drones take inventory of trailers outside its warehouses and perform other tasks aimed at making its distribution system more efficient, Wal-Mart is asking the Federal Aviation Administration for permission to research drone use in "deliveries to customers at Walmart facilities, as well as to consumer homes," according to a copy of the application reviewed by Reuters.

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Exclusive: Wal-Mart seeks to test drones for home delivery, pickup
IMAGE DISTRIBUTED FOR WALMART INC. - Walmart CEO Doug McMillon talks to an audience of suppliers and Walmart associates at the Walmart Product Sustainability Expo, on Tuesday, April 29, 2014 in Rogers, Ark. Walmart kicked off its inaugural Sustainable Product Expo, a three day collaboration with its suppliers to expand the availability of products that sustain people and the environment. Participating suppliers represent more than $100 billion in sales at Walmart; underlining the scale and scope of the Expo. (Spencer Tirey/AP Images for Walmart Inc.)
A Walmart sign shows gas prices starting at $2.78, Tuesday, Nov. 12, 2013, in San Antonio. U.S. pump prices are the lowest they've been since February 2011. (AP Photo/Eric Gay)
A man pushes a shopping cart outside of a Walmart store that boarded its entrance and closed early in Kailua-Kona, Hawaii, Thursday, Aug. 7, 2014, as the area prepares for Hurricane Iselle. Hurricane Iselle is expected to arrive on the Big Island on Thursday evening, bringing heavy rains, winds gusting up to 85 mph and flooding in some areas. Weather officials changed their outlook on the system Wednesday after seeing it get a little stronger, giving it enough oomph to stay a hurricane as it reaches landfall. (AP Photo/Chris Stewart)
President Barack Obama, center facing rear, shakes hands with Joel Anderson, CEO and President of Walmart.com, center right, after speaking at a Walmart store in Mountain View, Calif., Friday, May 9, 2014. Obama announced new steps by companies, local governments and his own administration to deploy solar technology, showcasing steps to combat climate change that don't require consent from a disinclined Congress. (AP Photo/Jeff Chiu)
President Barack Obama waves after speaking at a Walmart store in Mountain View, Calif., Friday, May 9, 2014. (AP Photo/Jeff Chiu)
President Barack Obama shakes hands with supporters after speaking at a Walmart store in Mountain View, Calif., Friday, May 9, 2014. (AP Photo/Jeff Chiu)
IMAGE DISTRIBUTED FOR WALMART, INC. - Walmart CEO Doug McMillon, left, watches as Indra Nooyi, Chairperson, CEO of PepsiCo, signs a new commitment to accelerate innovation in sustainable agriculture and recycling along with second from right, Ken Powell, CEO General Mills and John Bryant, CEO Kellogg during Walmart's inaugural Sustainability Product Expo, on Tuesday, April 29, 2014 in Rogers, Ark. Eight of the largest food companies announced pledges to help ensure that tomorrow’s food supply is affordable and sustainable. Companies also announced plans to launch a groundbreaking recycling initiative called the Closed Loop Fund, with the goal of making recycling available to all Americans. (Spencer Tirey/AP Images for Walmart Inc.)
IMAGE DISTRIBUTED FOR WALMART INC. - Walmart CEO Doug McMillon, left, and Procter & Gamble CEO A.G. Lafley shake hands after announcing, Tuesday April 29, 2014, a commitment to a 25 percent reduction in water per dose for all liquid laundry detergent at the John Q. Hammons Center in Rogers, Ark. during the inaugural Walmart Sustainable Product Expo. Procter & Gamble supports Walmart’s challenge to reduce water in liquid laundry detergents because it’s good for consumers and good for business. The smaller bottles also mean more energy-efficient packaging too. (Spencer Tirey/AP Images for Walmart Inc.)
At Walmart'€™s inaugural Sustainability Product Expo, Tuesday, April 29, 2014, CEO Doug McMillon grabs a selfie along with other CEOs from major supplier companies after they sign new commitments to accelerate innovation in sustainable agriculture and recycling. They all announced pledges to help ensure that tomorrow’s food supply is affordable and sustainable, and they also launched a groundbreaking recycling initiative called the Closed Loop Fund with the goal of making recycling available to all Americans. (Spencer Tirey/AP Images for Walmart Inc.)
In this Thursday, Dec. 26, 2013 photo, a family leaves a local Walmart in Mexico City. Looking around a Mexico dotted by Starbucks, Wal-Marts and Krispy Kreme outlets, it's hard to remember the country before the North American Free Trade Agreement, which has dramatically expanded consumer choice and trade since it took effect 20 years ago.(AP Photo/Marco Ugarte)
In this Tuesday, Jan. 28, 2014, photo, Hot Wheels cars, a Mattel product, are displayed in a Walmart store in Robinson Township, Pa. Mattel Inc. reports quarterly financial results before the market open on Friday, Jan. 31, 2014. (AP Photo/Gene J. Puskar)
A sign at the register inside a Bentonville Wal-Mart store seen at Colgate and Champions for Kids for SIMPLE Giving, on Thursday, March 27, 2014, in Bentonville, Ark. (Photo by Beth Hall/Invision for Cohn & Wolfe - New York/AP Images)
** HOLD FOR BLACK FRIDAY LAW ** Tony Rodriguez, Walmart associate, stocks the holiday section of a Walmart store in advance of Black Friday sales in Oklahoma City, Tuesday, Nov. 26, 2013. (AP Photo/Sue Ogrocki)
** HOLD FOR BLACK FRIDAY LAW ** Walmart associate Tammy Henderson stocks garland in the holiday section of a Walmart store in advance of Black Friday sales in Oklahoma City, Tuesday, Nov. 26, 2013. (AP Photo/Sue Ogrocki)
In this Nov. 26, 2013 photo toy are displayed for Black Friday sales in a Walmart store in Oklahoma City. For the first time in 70 years, Oklahoma residents can legally enjoy Black Friday mega-deals after legislators repealed parts of a law that prohibited retailers from selling items for less than they paid. (AP Photo/Sue Ogrocki)
In this Nov. 26, 2013 photo is a display of televisions in a Walmart store ready for Black Friday sales at a Walmart store in Oklahoma City. For the first time in 70 years, Oklahoma residents can legally enjoy Black Friday mega-deals after legislators repealed parts of a law that prohibited retailers from selling items for less than they paid. (AP Photo/Sue Ogrocki)
** HOLD FOR BLACK FRIDAY LAW ** Steve Baker pauses to take a closer look at a display of special Black Friday sale items as he shops in a Walmart store in Oklahoma City, Tuesday, Nov. 26, 2013. (AP Photo/Sue Ogrocki)
** HOLD FOR BLACK FRIDAY LAW ** Steve Baker pushes his cart past a display of special Black Friday sale items as he shops in a Walmart store in Oklahoma City, Tuesday, Nov. 26, 2013. (AP Photo/Sue Ogrocki)
This Sept. 19, 2013 photo shows the sign of a Walmart store in San Jose, Calif. (AP Photo/Jeff Chiu)
A woman shops in the grocery department at a Walmart store in San Jose, Calif., Thursday, Sept. 19, 2013. (AP Photo/Jeff Chiu)
A Walmart representative demonstrates a Scan & Go mobile application on a smartphone at a Walmart store in San Jose, Calif., Thursday, Sept. 19, 2013. (AP Photo/Jeff Chiu)
A man shops at a Walmart store in San Jose, Calif., Thursday, Sept. 19, 2013. (AP Photo/Jeff Chiu)
Customers walk outside of a Walmart store in San Jose, Calif., Thursday, Sept. 19, 2013. (AP Photo/Jeff Chiu)
Reusable shopping bags are offered for sale at new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
Consumers shop for meat products at the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
Nature Harvest Bread sales agents restock loaves of bread at the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
FILE - In this Thursday, Sept. 19, 2013, file photo, costumers shop at a new Walmart in Los Angeles. The government reports on sales at U.S. retailers in September on Tuesday, Oct. 29, 2013. (AP Photo/Nick Ut)
A senior consumer shops for fruits at the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
Consumers arrive at the opening of the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
Consumers shop at the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
Bimbo Bakeries USA's Bimbo Bear, right, welcomes consumers at the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
FILE - In this June 7, 2013 file photo, Doug McMillon, President and CEO, Wal-Mart International, speaks at the shareholders meeting in Fayetteville, Ark. Wal-Mart Stores on Monday, Nov. 25, 2013 announced that CEO and President Mike Duke is stepping down from those posts, and named McMillon as his successor, effective Feb. 1, 2014. (AP Photo/April L. Brown, File)
Consumers shop at the new Walmart Neighborhood Market, opening its 34,000 square foot store in the Chinatown district of Los Angeles Thursday, Sept. 19, 2013. (AP Photo/Nick Ut)
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The move comes as Amazon.com Inc, Google and other companies test drones in the expectation that the FAA will soon establish rules for their widespread commercial use. FAA Deputy Administrator Michael Whitaker said in June that the agency expected to finalize regulations within the next 12 months, faster than previously planned. Commercial drone use is currently illegal, though companies can apply for exemptions.

The FAA will review Wal-Mart's petition to determine whether it is similar enough to earlier successful applications to be fast-tracked, or whether it would set a precedent for exemptions, requiring regulators to conduct a detailed risk analysis and seek public comment, agency spokesman Les Dorr said. The FAA normally aims to respond to such petitions in 120 days.Amazon has said it would be ready to begin delivering packages to customers via drones as soon as federal rules allow.

Wal-Mart spokesman Dan Toporek said the company would move quickly to deploy drones depending on its tests and regulations.

"Drones have a lot of potential to further connect our vast network of stores, distribution centers, fulfillment centers and transportation fleet," he said. "There is a Walmart within five miles of 70 percent of the U.S. population, which creates some unique and interesting possibilities for serving customers with drones."

Finding ways to more efficiently warehouse, transport and deliver goods to customers has taken on new importance for Wal-Mart, which this month projected a surprise decline in earnings next year as it copes with costs to increase wages, beat back price competition and boost online sales.

In the FAA application, Wal-Mart said it wanted to test drones for taking stock of trailers and other items in the parking lot of a warehouse using electronic tagging and other methods. A Wal-Mart distribution center could have hundreds of trailers waiting in its yard, and a drone could potentially be used to quickly account for what each one is holding.

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The retailer also wants to test drones for its grocery pickup service, which it has recently expanded to 23 markets with plans to add another 20 markets next year. The test flights would confirm whether a drone could deliver a package to a pick-up point in the parking lot of a store, the application says.

Wal-Mart also said it wants to test home delivery in small residential neighborhoods after obtaining permission from those living in the flight path. The test would see if a drone could be deployed from a truck "to safely deliver a package at a home and then return safely to the same," the application says.

To date the FAA has approved more than 2,100 exemptions allowing for commercial drone testing and use.

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