Amazon has announced that it’s delivering more orders to Prime members in the top 60 U.S. metro areas either on the same day or the next day. This news comes just before Amazon’s scheduled report of its first-quarter earnings.
The company has been putting more money into fast shipping to keep customers happy in a competitive online shopping market.
Nearly 60% of orders placed through Prime in the top 60 U.S. metro areas in the first quarter arrived either the same day or the next day. This is up from about 50% in the second quarter of 2023.
Investors will likely pay attention to this when Amazon reports its earnings after trading closes on Tuesday. Wall Street expects Amazon to have another quarter of big revenue growth and more than double its profits compared to last year.
Amazon has been making more profit lately thanks to cutting costs, higher demand for cloud computing, and faster delivery.
Quick delivery is a big part of Amazon’s Prime membership, which costs $139 a year and offers benefits like two-day shipping and video streaming. The company wants to make same-day and next-day delivery the standard and plans to double the number of same-day delivery sites in the U.S. in the next few years.
CEO Andy Jassy said in a letter to shareholders this month that as Amazon gets items to customers faster, customers shop on Amazon more often. This is seen in the growth of Amazon’s everyday essentials business, which grew by over 20% year over year in the fourth quarter of 2023.
According to data from RBC Capital Markets, people spend more and shop more often if they get one-day shipping.
During the pandemic, Amazon grew its physical presence by adding new warehouses and delivery centers. Last year, it reorganized its network into eight regions instead of one national model, making deliveries faster and cheaper.
Jassy mentioned in his letter to shareholders that the cost to get a product to a shopper was down by more than 45 cents per unit year over year in 2023.
Amazon has set up more than 55 same-day delivery sites in the U.S., mostly around big cities. These sites are smaller than regular Amazon warehouses and store a smaller selection of goods. They also streamline the fulfillment process, meaning packages make fewer stops on their way to customers’ doorsteps, which saves money per shipment.
Amazon is investing more in fast shipping because traditional retail rivals like Walmart and Target are also improving their delivery services. Walmart says it can deliver items to shoppers in as little as 30 minutes, while Target recently launched a new loyalty program offering same-day delivery on orders over $35 in as little as an hour.
