One of the main reasons that online consumers shop on Amazon.com is for quick delivery. That, and the extensive selection of items. Amazon Prime members can get just about anything they want delivered within two days — a major perk for shopping with Amazon.com. Now, that deal just got sweeter for consumers as Amazon is making an $800 million investment to cut the Prime delivery window to just one day. For U.S. consumers who pay $119 a year for the service, this is a big upgrade.
During the company’s most recent earnings call, CFO Brian Olsavsky announced that Amazon is investing heavily to update its logistics network to prepare for the delivery change. This past March, Amazon dropped its $35 minimum for one-day deliveries and expanded the areas that are eligible for it. Mr. Olsavsky stated, “We’ll be building most of this capacity through the year, in 2019. We expect to make steady progress quickly and through the year.” This is, in part, to counteract the slowing growth the company is experiencing as it is getting bigger.
Just as some of the competition (such as Walmart and Target) has finally figured out how to keep up with Amazon’s aggressive delivery commitments, the ecommerce giant has upped the ante one more time and made its shipping even faster. The company believes that the move to faster shipping will put it back ahead of its competitors, with more online consumers sticking with Prime. Mr. Olsavsky said that the faster shipping would open up other potential purchases for customers, thereby increasing their Amazon spend. He adds, “By moving to one day [shipping], we increase the convenience and selection. We really think it’s going to be groundbreaking for Prime customers, and we’re very excited to add this capability.”
It seems that Amazon has been gearing up for this one-day shipping plan for a while, by expanding ts fulfillment center network nationwide. The company also started the Delivery Service Partners program last year, which supports entrepreneurs who want to start delivery businesses to ship Amazon packages. Amazon plans to use this new service in addition to its own fleet and major carriers such as UPS, FedEx, and the USPS to do its shipping. The company will most likely also rely on the air cargo hub it built in Kentucky in 2017, which houses 40 Prime Air cargo planes and thousands of truck trailers.
The United States remains Amazon’s largest Prime market, but the company has been speeding up deliveries from the two-day standard in other countries as well. In the European Union, for example, most shipments are already one-day. The retailer has made it clear it has a serious plan in the U.S. and worldwide to retain the title of “fastest online shipper.”