Kroger takes flight with drone delivery test
Photo: Kroger/Drone Express

Kroger takes flight with drone delivery test

Kroger thinks that drone deliveries have the potential to help transform its e-commerce operations.

The largest grocery chain operator in the U.S. announced yesterday a pilot program testing the use of autonomous drones to deliver online orders from a Kroger in Centerville, OH.

Jody Kalmbach, group vice president of product experience at Kroger, called the test an “evolution” of the company’s seamless shopping ecosystem including pickup, delivery and shipping.

“The pilot reinforces the importance of flexibility and immediacy to customers, powered by modern, cost-effective and efficient last-mile solutions. We’re excited to test drone delivery and gain insights that will inform expansion plans as well as future customer solutions,” Ms. Kalmbach said in a statement.

Kroger’s online sales topped $10 billion in 2020 as the company pushed ahead with a multi-year plan to meet consumers where, when and how they find most convenient.

The pilot program, run with Drone Express, a division of Telegrid Technologies, enables Kroger to identify dropoff points based on the location of a customer’s smartphone. This means that the store testing the drones will be able to bring condiments, sunscreen or other items to a park, for example, if a customer forgets to pack them for an afternoon picnic.

Customers placing orders can get their products within as little as 15 minutes. There are weight limits, however, with each order having a five-pound capacity. Kroger is offering special product bundles, such as child wellness (over-the-counter medications, wipes, etc.) and S’mores, which comes with all the fixings for the gooey, sugary summer delight. Customers at the Centerville store may place orders by going to Kroger.com/DroneDelivery.

Test flights will be managed by licensed Drone Express pilots from an on-site trailer at the Ohio store. Additional monitoring of the drones will be handled at an offsite location. Kroger has scheduled the first Centerville deliveries to begin later this spring. The retailer plans to run a second pilot from a Ralphs store in California at some point during the summer.

“The launch of the pilot in Centerville is the culmination of months of meticulous research and development by Kroger and Drone Express to better serve and meet the needs of our customers,” said Ethan Grob, Kroger’s director of last mile strategy and product. “We look forward to progressing from test flights to customer deliveries this spring, introducing one more way for our customers to experience Kroger.”

BrainTrust

"Someday it will be viable but not today. If it looks like a gimmick, walks like one and sounds like one then it must be a gimmick. "

Ken Morris

Managing Partner Cambridge Retail Advisors


"Kroger has taken bold steps to experiment with drone delivery. However until it’s scalable, it will remain a novelty."

Brandon Rael

Strategy & Operations Transformation Leader


"If I'm the leaders in ground transportation, I'm paying attention."

Rachelle King

Retail Industry Thought Leader


Discussion Questions

DISCUSSION QUESTIONS: Why do so many retailers seem intrigued about the use of drone technology to make deliveries? Do the numbers of pilots being run by major retailers — Amazon, Kroger, 7-Eleven, Walgreens and Walmart — lead you to think that this delivery method will be viable at some point in the future?

Poll

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Neil Saunders
Famed Member
2 years ago

I love the idea of being able to quickly order products for delivery to your current location and I do see some potential in this. However it’s pretty niche and given the weight limits and other operational challenges I cannot see drones becoming a big part of Kroger’s fulfillment infrastructure any time soon. That doesn’t mean they’re not right to test and trial these things though.

DeAnn Campbell
Active Member
Reply to  Neil Saunders
2 years ago

The weight is a big issue, and I certainly wouldn’t want an army of drones flying over my house to make daily deliveries to people in my neighborhood. It feels to me more like another tool in the tool chest to create a brand experience. Walgreens saw an uptick in food orders when they used Wing to deliver meals to nearby customers via drone, because the customer enjoyed the unique experience.

Mark Ryski
Noble Member
2 years ago

The idea of drone delivery captures the imagination, and the benefits if it could be implemented in an ideal world are compelling. But there’s one big problem: it’s not an ideal world. There are still many challenges with drone delivery that may never be completely resolved. First, drone flight regulations. In most places drone flights are prohibited, and so this will remain a challenge until formal flying regulations are established. Second, the five-pound maximum is problematic. Of course it works for small items but, as a grocery chain, many products won’t be suitable for drone delivery. I think the interest among these players is because the potential is intriguing and so testing and experimentation make sense, but practically drone delivery has a long way to go.

Venky Ramesh
2 years ago

If this pilot by Kroger is successful, customers all over the U.S. may be able to have their package delivered to the location of their smartphone, be it to their home, at the beach, or even the middle of nowhere. The only catch there is a weight limit of five pounds. We can work with that for now.

Not sure if the CFC they recently built in partnership from Ocado comes with launch/landing pads for drones. In any case, that is how the future MFCs should be built.

Gary Newbury
Reply to  Venky Ramesh
2 years ago

Innovative thinking may about to be unleashed of how to scale beyond the pilot.

Imagine running out of some spices or essential ingredient for a meal … 15 minutes later, you have it in your hand, contactless, hassle free!

The piece that I would want to know more about is the transmission of fulfillment (picking) and delivery (ETAs etc) information, to help the customer know it’s on it’s way and the time I expect to receive this, and a screen that I could enquire to check its location.

The other concern is adverse weather, such as torrential rain, high winds, snow and ice.

Still lots of potential to attract or retain customers looking to have a new experience from their dialing up of online services.

David Naumann
Active Member
2 years ago

Solving the last mile of delivery for grocery is the Holy Grail. Leading grocers and other convenience retailers are testing and piloting several options to identify a better way to get products to consumers faster and more cost effectively. Drones manned by humans seems expensive, but it is probably a good way to test the feasibility of the concept until more innovative technology is available. Delivering products to wherever customers are is a compelling proposition and it will be a customer expectation in the future.

DeAnn Campbell
Active Member
Reply to  David Naumann
2 years ago

Here’s a thought — wouldn’t it be fun if a version of drones could deliver food orders from the QSR in the terminal directly to travelers at their gate? I’d pay extra to avoid wading through crowds for a beverage before my flight. 🙂

David Naumann
Active Member
Reply to  DeAnn Campbell
2 years ago

Great idea!

Matthew Brogie
Reply to  David Naumann
2 years ago

I certainly agree that the last mile of delivery is the Holy Grail. Why? It’s really just a simple question of weight ratios, isn’t it?

Seriously, since the payoff of getting there is so high and the problem is so big, it requires huge organizations with a vested interest to solve. I expect the problem will be solved faster and the tech to enable the solution will arrive faster *because* there is substantial effort and investment from companies like Kroger who generate $Billions in profit. We’re still very early in the process, and it will take a lot of trial, error and evolution to get to where we will undoubtedly be at some point in the future.

Shep Hyken
Active Member
2 years ago

Retailers have to find ways to get their merchandise to their customers in the fastest and most efficient way possible. Amazon has taught the consumer to expect fast delivery. Retailers are working hard to find solutions to meet their customer’s high expectations. Drone delivery may be one of the answers.

Suresh Chaganti
Suresh Chaganti
Member
2 years ago

Drones are one of the methods retailers are trying out. Amazon has been doing it for years. There are many paths to figure out the last mile – Target is trying with crowdsourcing, something Walmart also tried in the past. Kroger is also building MFC. And we have Urbx with a vision of a fully-automated MFC plus store.

The reality is, no one has figured out the last mile yet, and a lot of innovation and experimentation is going on, which is great. In my opinion, additional layers of stock locations/neighborhood stores are required a go-between DC – MFC/store – consumer. Think of one store every five square miles, within the neighborhood that can be autonomous vehicle-friendly.
A combination of proximity + right transportation method (including drones) and sophisticated demand forecasting and replenishment processes could be the solution.

Richard Hernandez
Active Member
2 years ago

First, the weight limit will reduce the number of items that could be delivered. Second, I know the flight regulations are still a big deal and not really 100 percent ironed out. And when fees are finally set, I would guess it wouldn’t be cheap because you have to pay for the technology somehow. For me, I don’t see using it to order and deliver a Slurpee from 7-Eleven…

Rick Watson
2 years ago

In three years Kroger will retrench. How many of the Ocado centers will stick? What percentage of deliveries will be done by drone? Kroger != Amazon. I think they have the “me too” disease.

DeAnn Campbell
Active Member
Reply to  Rick Watson
2 years ago

I agree with you Rick. I think their profit margins took a hit over 2018 and 2019 so they are trying everything to see what works. But ultimately they will likely see more benefit from focusing on private label than on drones.

Gene Detroyer
Noble Member
Reply to  Rick Watson
2 years ago

Here is what Kroger knows … in the future, groceries will be delivered autonomously.

Here is what they don’t know … which way will be the best to do it.

So let’s try everything and see which fails, morphs into something else or is a straight-out success.

Jennifer Bartashus
2 years ago

Drones are a great way to capture media impressions, capture the imagination of the public and positively influence consumer perception about how technologically progressive a company is, much in the same way as autonomous vehicles did a decade ago. Kroger has invested heavily in its omnichannel strategy, so it makes sense drones are being tested as part of it. The capabilities of drones will certainly expand over time – but for now, range (can it really get all the way to the park or beach and back?), weight constraints and regulations may make the biggest ROI from drones come in the form of positive sentiment vs. any major step-change in the retail landscape.

Ken Morris
Trusted Member
2 years ago

Someday it will be viable but not today. If it looks like a gimmick, walks like one and sounds like one then it must be a gimmick. Perhaps the drone will be run down in the driveway by my autonomous Muskmobile. We have an insatiable appetite for instant gratification but this is too soon to really make sense. Maybe we should consider paying a livable wage instead of inventing new ideas on how to eliminate people.

Dave Bruno
Active Member
2 years ago

The “drop in on me anywhere” use case is fascinating. However, I am not convinced the demand for this service will ultimately outweigh the logistical costs and challenges Kroger will face implementing it. Offering prepared foods will help with demand, I think, but I’m still not convinced this will, ahem, take off. Plus, am I required to tip a drone?

David Mascitto
2 years ago

What intrigues retailers about the use drone tech? I would say costs. It could potentially be more cost-effective to deliver small packages by drone (especially if their flight paths are pre-determined vs. remote controlled) than having couriers drop off packages to each home as is done today. I could see this working for a 7-Eleven or Amazon — maybe Walmart where orders are single box shipments or smaller. Not so sure about grocery delivery with heavy and bulky goods.

Bob Phibbs
Trusted Member
2 years ago

It’s great PR, but how does this pencil out on a cost per order basis? Are we enabling traffic in the sky for lip ointment? Serving rural Australia or somewhere remote I can see, but Dayton or NYC? This has a long way to go for practical sense.

DeAnn Campbell
Active Member
2 years ago

The last mile is the most expensive, and most critical mile. The physical point where the product gets into the hands of the customer is where future business is won or lost. Delivering through 3rd parties like FedEx, UPS or Shipt water down that connection between brand and customer and take away the retailer’s ability to control the brand experience. Drones may not be ideal and have many limitations, but they are a first step toward retailers restoring that direct chain of custody from brand to customer.

Paula Rosenblum
Noble Member
2 years ago

Testing is always good. Pilot programs (oh dear, that’s a pun) will let retailers know if it’s a cost-effective approach.

Meanwhile, high school students everywhere are honing their BB gun skills to take on the drones.

Rather than say or nay on this one, I’d like to just watch it play out.

Andrew Blatherwick
Member
2 years ago

This is a great publicity story and shows how Kroger is totally customer focused. Is it a serious proposition for volume delivery of groceries? NO. The weight limit is a major factor but so too will be regulation. If all retailers took to the air there would be congestion and accidents all over the place. Not to mention that fact that you would need an army of pilots to guide them, which is hardly cost effective.

Nice story, but reality is drones are still a long way from being a serious business for retail home delivery.

Gene Detroyer
Noble Member
2 years ago

Nice idea. But the limit of 5 pounds makes it of limited value to a grocer. It works for Amazon. It works for convenience stores and pharmacies. Yes, it is not meant for groceries, but for Kroger it strikes me as a lot of work and effort for a tiny opportunity.

That being said, there will be delivery alternatives in the near future, many of which we talked about in the past, which will change the way people get their groceries.

Doug Garnett
Active Member
2 years ago

This news makes me incredibly sad. Kroger seems to have lost their way with this development. And the fact that many operations are testing drones? That merely indicates the technology now CAN do it — but it avoids the question of whether they SHOULD build this as a service.

Living near a shopping center owned by Kroger, which has had some key spaces which have been empty for 15 years, shareholders will benefit more from Kroger buttoning up their real estate management than from drone delivery.

Gary Sankary
Noble Member
2 years ago

I think the tipping point will come when drone flights are fully autonomous and will not require a pilot, as the article implies. I also feel that autonomous devilry vehicles make more sense in the long run for final mile fulfillment. Weight limits, the single out and back delivery from origin to destination and back will significantly hamper the ability for companies to use drones at scale. I could see certain items that are highly time sensitive and lightweight — prescriptions come to mind.

I expect most of my deliveries in the future to come from autonomous, self-piloted vehicles that can handle multiple deliveries on one run. Maybe with a drone to get from the street to my porch. Like I said, in the future.

Ryan Mathews
Trusted Member
2 years ago

Retailers love drones because a) it’s driverless delivery and b) drones can’t strike … yet.

Seriously, road-based delivery is expensive and problematic. But drones are the technological equivalent of an overly-rich dessert. One taste is intriguing and satisfying, too much of a good thing leads to obesity, diabetes, and death. Obviously as the popularity of drones increases, the more likely that something will go wrong. One drone above you great. Five hundred drones buzzing overhead, not so much. So the more drones succeed, the faster the bloom will be off the rose.

Drone technology’s success in retail is the seed of its own demise.

Jlauderbach
2 years ago

Most of my thoughts have already been captured by the panel. I do not believe drone delivery will be a viable last mile mechanism in the foreseeable future. The complexity of autonomous vehicles, the liability of unforeseen results of intercepted (hacked) communications, and basic limitations of capacity are huge hurdles to clear. It is good to see the vision and investment in trying new ideas. As Henry Ford was to supposedly have said “If I had asked people what they wanted, they would have said faster horses.”

Brandon Rael
Active Member
2 years ago

The mitigation of the last mile has led to the emergence of the micro-fulfillment movement, which includes the BOPIS, curbside pickup, and same-day delivery operating models. This new model has shifted. With the great acceleration sparked by the pandemic, these new capabilities have really scaled out, with the retail store serving as a fulfillment center for digital orders.

This new operating model calls for an innovation-first approach. The industry has responded with a more agile, flexible, scalable approach by leveraging a mix of physical stores, micro-fulfillment centers, and dark stores. Kroger has taken bold steps to experiment with drone delivery. However until it’s scalable, it will remain a novelty.

While drones have become a bit more commonplace, they will remain a novelty and a curiosity until they are fully autonomous and, most importantly, safe. Once this happens, there could be measurable improvements that will positively impact the retailer’s bottom line.

Kenneth Leung
Active Member
2 years ago

Right now it is a gimmick, and it’s probably going to be amplified by social media influencers. Okay to test but given the weight and logistics limits and the first time one of those drones causes property damage … I can see it deliver in the middle of a remote location like a beach (trees would create a problem when dropping it on a wilderness trail), but navigating a drone in the middle of an urban area just screams for liability issues.

Ananda Chakravarty
Active Member
2 years ago

This is all about cool new tech (and the PR that goes with it). For a $10B+ company, working with Drone Express from Telegrid is like giving your local brewer a chance to sell beer on consignment in your store beverages fridge. It’s most likely a nominal cost to test and it has gotten the attention of at least a group of experts in the industry. Novelty or not, it’s great to test it and who wouldn’t order this way if they could — just to be part of tomorrow.

“Let’s go invent tomorrow instead of worrying about what happened yesterday.” – Steve Jobs

Craig Sundstrom
Craig Sundstrom
Noble Member
2 years ago

My question is: why do we keep paying so much attention to something that most of us agree is a long ways from practicality (if ever)? And I think that answers, at least partly, the first question: it’s an inexpensive way to generate publicity.

storewanderer
storewanderer
Member
2 years ago

So is this what the most recent round of budget cuts in the stores is being used to pay for?

I like the idea of drones a lot, but the 5 pound weight limit should have been what ended the discussion here. Not practical unless the weight limit can be increased.

John Karolefski
Member
2 years ago

Ryan Walsh, the CEO of the Valqai drone delivery mailbox system, predicts these drone deliveries spreading across the country in three to five years — hundreds if not thousands of these drones in the air at the same time making critical deliveries of, say, a bags of Doritos, hot dogs and beer for the Big Game. That’s either super convenient or the most inane idea ever conceived.

Gary Newbury
2 years ago

This is such an awesome approach to utilising drones within a retailing context. The big plus that it probably hits super-convenience by being fully integrated into the customer’s (physical) journey by using the location polling of the customer’s cell phone to triangulate on the delivery point, rather than a terrestrial address and then send the drone in to navigate the porch. Of course, if I am in my upstairs office as I order and continue working until I am alerted there’s a drone delivery happening “now,” not sure what it will make of my location then? Do I need to open a window and let the little bug in?

Using location polling, especially in open spaces, like the local park, means if the customer moves location, they can still be tracked. The delivery can still be judged a great success.

It brings a new sense to ordering beer from your back gardening, and 15 minutes later it arrives there without having to disturb the party to answer the door!

Glad to see a leading Grocer is considering this seriously enough to run this trial to experiment and learn how to enhance their online services.

The operating costs of a drone, and their speed, can provide superior performance for the retailer and help integrate, potentially, into the customer’s day to day journey.

Think of the wider applications of this during another pandemic, vital PPE, hand sanitiser or OTC medications. A significant step forward, indeed.

Rachelle King
Rachelle King
Active Member
2 years ago

Unsurprisingly, Kroger, always innovative and always leaning into what’s next. If I’m the leaders in ground transportation, I’m paying attention. While drones won’t wipe them out tomorrow, the list of major retailers investing in this technology is nothing to dismiss. Smarter, faster, cheaper is the language of last mile delivery and drones are becoming fluent fast.

Still, with a 5 pound weight limit, there is some obvious room for continued development. Not withstanding the curious case for drone air traffic control, it’s unlikely that the emerging relationship between drone technology and retailers is a fad.

Casey Craig
2 years ago

Drones could offer a solution to solving the last mile challenge. The speed of delivery could make drone demand high. But at what cost? The weight limits and regulatory landscape, for certain, will limit how viable drone delivery will be in the near term. It’s great that retailers are looking for new ways to reach their customers and meet their needs, but they should be careful about using technology for technology’s sake and jumping on trends that may turn out just to be novelties.