Amazon pushes to achieve ‘under 24-hour delivery’ for all its packages in the USA

April 29, 2024 by
Frank Calviño

Amazon is aiming to deliver within the U.S. in under 24 hours. It is pursuing this goal as a competitive advantage in the face of an increasingly challenging e-commerce scenario in the U.S. 

The company said on Monday that nearly 60% of orders placed through Prime in the top 60 U.S. metro areas in the first quarter arrived the same or next day. That is up from roughly 50% in the second quarter of 2023.

Investors will be particularly interested in this topic when Amazon reports first-quarter earnings after the close of trading on Tuesday. Wall Street expects the company to post another quarter of double-digit revenue expansion and profits to more than double from a year earlier.

In recent quarters, cost-cutting efforts, cloud-computing demand, and faster fulfillment have driven higher profits.

Speedy delivery is a hallmark of Amazon’s Prime subscription offering, which charges members $139 a year for benefits such as two-day shipping and video streaming. The company has said it wants to make same-day and next-day delivery the standard and plans to double the number of same-day delivery facilities in the U.S. within the next few years.

“As we get items to customers this fast, customers choose Amazon to fulfill their shopping needs more frequently,” CEO Andy Jassy wrote in his letter to shareholders earlier this month. “And we can see the results in various areas, including how fast our everyday essentials business is growing (over 20% y/y in Q4 2023).”

According to RBC Capital Markets data, consumers have been shown to spend and shop more often if they have one-day shipping.

Amazon’s physical footprint swelled between 2020 and 2022 as the pandemic-driven e-commerce boom pushed the company to rapidly add new warehouse and delivery centers to its logistics network. Last year, Amazon retooled that network into eight regions instead of using a national model, which the company says has resulted in faster yet cheaper deliveries. Jassy, in his shareholder letter, noted that the cost to serve, or the cost to get a product to a shopper, was down in 2023 by more than 45 cents per unit year over year.

An increasing ‘same day delivery’ network 

Amazon has already set up more than 55 same-day delivery sites in the U.S., primarily clustered around major metro areas. The facilities are roughly 100,000 square feet, compared to a typical Amazon warehouse, which can be the size of 26 football fields. They store a smaller selection of goods that are the top-selling items in each city.

Same-day sites also condense the fulfillment process, typically spanning multiple Amazon facilities under one roof. A package makes fewer stops on its route to a shopper’s doorstep, cutting down on costs per shipment.

Amazon has bolstered investment in fast shipping as traditional retail rivals Walmart

 and Target have stepped up their delivery game. Walmart says it can deliver items to shoppers in as little as 30 minutes, while Target launched a new loyalty program in March that offers same-day delivery on orders of more than $35 in as little as an hour.

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