Amazon revealed that it is planning to upgrade its prime free shipping program to delivers orders in one day instead of the two-day offer at present. The company is planning to deliver packages to members of its loyalty club Prime in just one day in place of two days.
The good news is that Amazon.com beats Wall Street estimates for profit for 2019 first quarter and reported 3.6 billion dollars net income. This is more than twice the year ago along with the all-time quarterly record for the e-commerce behemoth. However, this good news marks a costly challenge for Amazon competitors that will have to pay money into the logistics problem.
Amazon’s Chief Financial Officer, Brian Olsavsky said that Amazon is expected to spend about 800 million dollars in the second quarter on the upgrades in terms of moving Prime free shipping program from two days into one. As per his reports, Amazon already offered free one day or even same day shipping for selective products in the past. This new Prime program aims at making one-day shipping standard.
Mr. Olsavsky supposed that ‘by changing to one-day shipping, we can enhance the selection and convenience. We actually think it’s going to be innovative for Prime customers and we are very much excited to add this capability.’ He added that the free one-day shipping would be rolling out to Prime markets worldwide and in US Amazon Prime membership costs at 119 dollars per year or 12.99 dollars per month.
U.S. rivals target Corp, as well as Walmart, has progressively rolled two-day shipping on some items that Amazon prime customers can get that speed for 119 dollars every year in the US. As per CFO Olsavsky vast majority of Amazon selection is available in two days and the company already expanded the number of good eligible for the same day or even two hours delivery.
Former UPS analyst, Cathy Morrow Roberson said that ‘Amazon is cranking it up a notch and trying to position themselves apart.’ As per her estimation, roughly 20 % to 25 % of Amazon shipping is at present within one day. She noted that speedy service was easy in large US metro areas where it already had constructed out its delivery network successfully. She added that ‘I don’t know that in what way they are going to do it in a little town in the USA.’
This change will initially take place in the North American market; however, it is planned to expand globally across all countries that offer Prime memberships. As per the Amazon statement prior year the company had over 100 million Prime members worldwide. As per CFO Olsavsky, the company will also utilize all of the available levers for free one-day shipping which would include existing partners UPS and U.S Postal Service along with Amazon own third party delivery network. At present, he also declined to give precise information such as the timeline for the rollout and said that the step involves numerous diverse moving parts.
This announcement came because Amazon current profit is estimated to be more than doubled in the first quarter and thanks to lower than expected costs. Chief investment officer at J. Stern & Co, Christopher Rossbach, said that ‘the higher profits of Amazon business and AWS have assisted the company in attaining operating income that is well ahead of marker probability.’
As per Amazon spokesperson changes have already started as the company last month dropped a 35 dollar minimum for one-day deliveries and also expanding one-day selection as well as zip codes too.
