Techinfo: Amazon to Offer Same-Day/Next-Day Deliveries

Prime members will be looking forward to Amazon’s newest offer– same-day and next-day delivery.

In the illustration of Amazon’s delivery network, it reveals how the company will manage the one-day shipping for its Prime members. According to RBC Capital Market’s report in March, 72% of the total U.S. population, along with most of the households in 16 of the wealthiest and most populated states and Washington, D.C can experience faster shipping from Amazon.

For the last four years, Amazon almost tripled its U.S. logistics infrastructure in creating fulfillment centers over the country. The company approximately doubled the volume of distribution space Home depot has.

As a result, Amazon’s plan has a high advantage when it starts. And also consider its recent earnings report into changing the free two-day shipping to one day for Prime members. These people spend $119 per year to Amazon to access services like fast delivery, unlimited music, video catalog, and exclusive deals.

After the announcement, a Morgan Stanley analyst wrote, “We see Amazon’s 1-day Prime shipping raising consumer expectations and increasing the cost to compete in e-commerce.”

The distribution footprint of Amazon shows a four-year change in the company. The multinational technology company covers the majority of the coastal cities and also invaded Texas and some metropolitan areas in the Midwest.

Convenience in Amazon

The consumer’s need to get the product immediately is the reason why they shop in physical stores. But Amazon may transform that mindset by reducing delivery time to one day. After trying out the one-day default shipping to some areas, the company received good order trends, Amazon’s CFO, Brian Olsavsky stated on the first-quarter earnings call.

The company also created some impact on the stock market. Walmart and Target, Amazon’s rival retailers, experienced a decline in their shares after announcing the one-day deliveries of Amazon. Furthermore, most retailers that offer two-day shipping must develop their logistics infrastructure to keep up with Amazon.

Amazon’s plan won’t be cheap. During this quarter, it will spend $800 million for the development of one-day shipping. According to RBC, the company’s new offer is not accessible in 15 U.S. states. So, they might need to allocate more budget to stretch to those areas.