Amazon To Offer One-Day Free Shipping Service To Prime Members
Amazon is now changing the e-commerce game once again through an offer to customers that most of its competitors may not be able to duplicate. Amazon recently announced that it will be upgrading its free-shipping option for Prime members from two-day free delivery to one-day free delivery.
Over the years, online retailers have spent billions of dollars in tweaking and enhancing their supply chains to lower delivery times. Both Target and Walmart have been playing catch up with Amazon and have thus far achieved to offer a two-day delivery service to its customers. However, their services are drastically about to become obsolete given Amazon's latest announcement.
During its latest earnings call, Amazon revealed its plans to offer the one-day delivery service, essentially leaving its direct competitors in the dust. The company's CFO, Brian Olsavsky, made the announcement at the company's first-quarter earnings call while answering questions about its expenses.
Olsavsky explained that they have already spent a lot of money and over 20 years in expanding their logistics network, which is why they should be able to pull off the plan. However, the executive cautioned that there still needs to be a lot of work to be done and huge investments before the service becomes available to everyone. Olsavsky then pointed out that the firm has actually set aside around US$800 million for the particular investment.
Amazon does currently offer a one-day shipping option for Prime members, but it is only for select items and in select locations. The company apparently wants to change that and hopefully offer the service for a wide variety of products and locations.
Amazon plans to slowly offer the service in different parts of the United States in the next few months. The overall goal would be to cover all of the products currently being offered with two-day free shipping with their new enhanced delivery service. As of the moment, more than 100 million items are available with two-day free shipping.
According to the company, the move is a strategic one that will be well worth the investment. Decreasing the amount of time it takes for orders to arrive will apparently encourage more customers to purchase items online. Rather than going out to buy a specific item, some customers may opt to just order through Amazon's website and wait for the item to arrive the next day. The e-commerce giant is also betting on an increase in Prime subscribers when the service becomes available. Amazon believes that the added subscribers and the added purchases should cover the cost of its enhanced logistics system.