Amazon Introduces One-Day Shipping

Written by Jennifer Clark
Posted June 5, 2019

It’s here — one-day shipping for Amazon (NASDAQ: AMZN) Prime members.

During Amazon’s latest earnings call, the company announced that it would aim to make one-day shipping its new standard for Prime members. I don’t think Prime members thought it would come as quickly as it has.

On Monday, the e-commerce giant announced that there are now over 10 million items available for one-day shipping to Prime members. Two-day shipping was efficient enough for me; having one-day shipping is a whole new luxury. 

A few weeks after Amazon’s earnings call announcement, Walmart (NYSE: WMT) announced that it’ll be launching a next-day shipping service — of course, not entirely comparable to Amazon’s 10 million items. Walmart said that next-day shipping would only include its most popular items. The new plan puts them in competition with Target's (NYSE: TGT) Restock program, which makes 35,000 items (largely focused on household replenishment) available for next-day shipping.

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Amazon isn’t messing around when it comes to delivery because of the convenience it offers Prime members. It's easy to order something from its platform and receive it in the next day or two. Why wouldn't consumers choose to order from Amazon rather than any other retailer? With just a few clicks, they can have the items they need in no time; that’s the perk of becoming a Prime member. So it's pretty obvious that Amazon is hoping to use the one-day shipping option to entice non-Prime users into becoming Prime members.

The once-a-year Prime membership fee ends up being like everything else people subscribe for — out of sight, out of mind. We don’t really think about those kinds of fees since they only happen once a year. And even if the member fee increases, that’s okay because would you really cancel your membership and not have access to that level of convenience again? I bet the answer to that question would be a “no.”

Amazon already reaches 100 million U.S. consumers with its Prime membership. However, consumers are still choosing Walmart or Target for some of their convenience needs. According to a survey from Numerator, 65% of Walmart’s grocery pickup orders came from Prime members.

Amazon doesn’t have physical stores like Walmart and Target, so it can’t offer other conveniences like picking up items at a store on your way home from work. That’s why Amazon relies on having the technology and manpower to get items delivered as quickly as possible.

Amazon Prime's free one-day shipping is offered from coast to coast. Alaska, Puerto Rico, and Hawaii have access to Prime, but those shipping speeds vary from one day to five days. The launch of one-day shipping has already been 10 times bigger than Prime's two-day shipping launch back in 2005. That’s because Amazon’s network continues to expand. In the U.S., there are 110 fulfillment centers, 40 package sortation centers, 100 delivery stations, and 20 air gateways. As I mentioned earlier, the company has the technology and manpower to back a business idea like one-day shipping.

One-day shipping will soon become widely expected and considered the normal amount of time to wait for an item to be delivered to you. This will certainly increase Amazon orders and Prime memberships — why go anywhere else if you have one-day shipping as an option? Unfortunately, many other retailers aren’t able to compete with that, which will morph Amazon into an even bigger company than it already is.

Until next time,

Jennifer Clark
Pro Trader Today
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