16 May Amazon Keeps Raising the Bar on Delivery
Amazon Prime members currently enjoy two-day shipping on most Prime-eligible items. It’s well documented how this unprecedented level of ecommerce delivery speed has changed the retail industry.
But it turns out the company isn’t stopping there, having recently announced plans to shorten its delivery window to just one day on eligible items for Prime members. The cost to make this happen will be a cool $800 million. However, for a company that raked in $59.7 billion in the first quarter of 2019 alone, it might be a worthwhile investment.
Other Retailers Have to Take Note
Many online retailers use Amazon and its speedy delivery and good customer service as a model for their own businesses (many also rely on Amazon as an important sales channel). After all, Amazon has changed the e-retail world’s business strategy and revolutionized the way online purchasing takes place. Amazon is the online company that other e-retailers try to keep up with, but the question will be how many of these other companies will be able to match an even faster delivery time.
Amazon has been hinting at a faster delivery model for several months and has been ramping up its infrastructure to do so. To be able to offer one-day delivery at scale, the company has been building more fulfillment centers, adding more than ten this year alone. This is in addition to investing in its driver and delivery fleet networks to be able to handle this smaller delivery window.
Getting the Work Done
The one-day delivery model will utilize Amazon’s own fleet as well as major carriers like FedEx, UPS, and the USPS. For those who thought that Amazon would take over the shipping space completely, they might want to think again, as it appears that the company will need help (at least for the moment).
Amazon CFO Brian Olsavsky said that in order to build the network to go from two-day delivery to one-day, they need to use their transportation partners to add required capacity. Olsavsky added that the hope is that one-day shipping will result in more buyers using Amazon, which is, of course, what the company is aiming for. This would help Amazon meet its goal to increase the average amount spent by Prime members. Olsavsky said, “We think that [one-day shipping] will open up a lot of potential purchases and will open up convenience to those customers.”
Always Pushing Forward
With the price of Amazon Prime now at $119 a year (if prepaid annually), and with more than 100 million Prime subscribers worldwide, this faster delivery timeframe is a large undertaking, even for the online delivery leader. Amazon, however, clearly feels it is ready to take on this next delivery challenge by continuing to build capacity throughout 2019 — and set an even higher bar for its competitors.