Kroger Co.’s drone delivery partner has landed funding that will enable it to continue pursuing certification so it can resume and expand services to Kroger customers.
Dayton-based Drone Express has received $250,000 in funding from Atlanta-based venture capital firm Venture 53. That funding is part of a larger capital raise called a SAFE, or simple agreement for future equity, Drone Express CEO Beth Flippo told me. That money serves as a bridge to an upcoming Series A round of funding.
“It’s not as much money as we like to get, but Venture 53 is a pretty big VC in the logistics space,” Flippo said of Venture 53’s involvement. “It’s a real mark of approval. It means a lot.”
Venture 53 invests in companies in five categories it views as game changers: freight and supply chain logistics; payments and visibility; yield management; warehousing and fulfillment; and shipping and logistics. It has announced three investments in the first quarter, all in the supply chain technology area, including Drone Express.
Drone Express is using the capital to continue pursuing certification through the Federal Aviation Administration that will enable it to expand its delivery capabilities.
The company is one of 10 in the U.S., along with companies like Amazon and Google, striving to get an airworthiness certificate on its aircraft. Just those 10 companies were selected to participate. That certificate will enable Drone Express to greatly expand delivery range. It’s now limited to “line-of-sight” delivery, meaning it needs people in view of the drone. The certificate, the same as what a Boeing jet would get, would enable Drone Express to fly drones beyond line of sight.
Drone Express launched a drone delivery pilot program with Cincinnati-based Kroger (NYSE: KR), the nation’s largest operator of traditional supermarkets including Pick 'n Save and Metro Market stores in Milwaukee, in July 2021.
“We needed a customer with a lot of locations and a lot of population density around them,” Flippo said.
That made Kroger a prime candidate.
“I pretty much started stalking them for about a year and a half,” Flippo said. “Never taking a ‘no,’ flying to Cincinnati to be in the neighborhood.”
Flippo was based in New Jersey, just outside New York, at the time but eventually moved her family to Southwest Ohio for the Kroger pilot program.
Kroger agreed to start the pilot program at its Centerville store on Main Street, just outside of Dayton.
“It was a tremendous success,” Flippo said. “We expected picketers and people not liking anything new. We never got any of that. People would come to the parking lot and tailgate to watch the drones take off.”
The main request from customers was whether it could expand the delivery beyond the initial 1-mile radius of the Centerville store. That was later expanded to 2 miles.
"Customers loved it," Flippo said. “People would place multiple orders. So many people ordered when the stove was already on and they forgot one spice.”
The average delivery time was 11 minutes, so customers could expect products to arrive quickly. Kroger touted delivery as typically taking 15 minutes or less. Each delivery was limited to 5 pounds, although the drones can handle more.
The program initially was planned for three months but it was so successful Kroger decided to extend it to eight months. It was paused in late February 2022. Kroger and Drone Express learned how it worked and what customers wanted. The two companies’ partnership remains intact and the plan is to resume the service once Drone Express gets those certifications.
“We would love to roll out and have this everywhere,” Flippo said. “But we’re trying to do it right. We know we’ll come out ahead at the end.”
Once Drone Express gets that certification it expects to resume deliveries for Kroger at Centerville and eventually at more stores.
“I really do think it’s going to be this year,” Flippo said of the FAA certification approval. “We’re in the same boat as Amazon and Google. It will happen. It just takes time. Hopefully you’ll be able to see drones flying beyond line of sight. That’s the key to all of this.”
Kroger hasn’t worked with any other drone companies, Flippo said. So she expects her company to expand the service at Kroger once the approvals are received.
“We’re hoping it gets to the point where it’s economical and scalable,” Flippo said. “That’s what Kroger is really interested in.”
Kroger officials couldn't immediately be reached for comment.
The drone service is among several Kroger initiatives to use autonomous vehicles and robotics to move products from distribution centers to stores to customers. Earlier this week it partnered with autonomous vehicle provider Gatik to deliver customer orders and products in Dallas from a customer fulfillment center to several Kroger stores. Those items can they picked up, sent out for delivery or, in the case of products, placed on shelves in those stores. Kroger also is testing autonomous delivery from stores to customers through Nuro. And its seven giant new Ocado warehouse and distribution centers — including one in Pleasant Prairie — with 10 more to come along with numerous spoke facilities are all operated by robots, making them faster and more efficient.
Drone Express, which has a dozen employees, also has pilot programs for drone deliveries for pizza chain Papa John’s and for construction materials distributor Winsupply.
Venture 53’s partners see Drone Express as having a lot of potential to add more delivery customers.
“We’re always looking to find and support the most promising companies entering the supply chain sector,” Amy Mack, partner at Venture 53, told me. “We see an opportunity for Drone Express to integrate into the existing logistics world and we believe we can help them navigate the sector.”
Drone Express was launched in 2021 as a spinoff of Telegrid, a firm Flippo’s parents started in 1984. Flippo worked there as an embedded software developer and developed a radio system that drone companies wanted to buy. Drone Express was spun off as a separate company and acquired Telegrid.
