No sooner had everyone mostly adjusted to the new normal of two-day delivery across the continental U.S. than Amazon raised the bar yet again, signaling a move to free one-day shipping for its 100 million-plus Prime members.
Brian Olsavsky, the company’s CFO, told analysts on the company’s Q1 call that Amazon will be transitioning to one-day Prime delivery throughout 2019, starting in the second quarter. He also said it would represent an $800 million investment this year.
“We have been offering, obviously, faster than two-day shipping for Prime members for years, one day, same day, even down to one to two-hour delivery for Prime Now,” Olsavsky said. “So, we’re going to continue to offer same day and Prime Now selection in an accelerated basis. But this is all about the core free two-day offer morphing or evolving into a free one-day offer.”
Olsavsky said Amazon has been expanding the number of items eligible for one-day delivery, as well as the number of ZIP codes, in recent months.
“It’s a significant step and it will take us time to achieve,” he said. “And we want to ensure that we have a good delivery experience for our customers as we evolve this offer.”
Olsavsky said Amazon’s network has been largely tuned to two-day Prime delivery, so a lot more capacity and supply chain work, as well as coordination with transportation partners, will be required to make one-day delivery a reality.
“We’re moving quickly and we’ve got a good head start,” he said. “There is a certain tranche that we can dial up quickly, and we’ve started to do that and you’ll see that very quickly in Q2. And then stay tuned, because we’ll be building most of this capacity through the year in 2019.”
Asked about the rationale of going to one day, Olsavsky said it was to offer more convenience and selection for Prime members.
Colin Sebastian, a managing director and senior analyst with Robert W. Baird, said Amazon isn’t reacting to the industry catching up with Prime’s two-day promise, but enacting something that’s been in the works for some time.
“Certainly their long-term goal is to…