Amazon expands same-day delivery – for some
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Corey Fedde Staff
Is two-day delivery just too long to wait? Amazon may be able to help.
The e-commerce behemoth is extending its same-day delivery service, already available in 16 cities, into an additional 11 metropolitan areas across the United States. The service will offer shoppers the potential to have online purchases delivered within 24 hours, seven days a week.
It’s a "remarkable" business maneuver, says Mark Hamrick, senior economic analyst with Bankrate.com, in a phone interview with The Christian Science Monitor.
"Consumers are being conditioned to think about immediate satisfaction – to the degree that more and more entities are trying to think about ways to accommodate that growing preference," he says. "Amazon has proven it is as adept at moving in that direction as anyone."
How does the service work?
Amazon's same-day delivery is free, as long as customers order more than $35 worth of the million or so items eligible for same-day delivery, according to the press release. The catch? Prime members only.
The perk is one of many designed to give Prime members access to everything from entertainment to food faster and more conveniently. Current features include free online streaming of old and original television series, free two-day shipping for nearly 30 million items, and access to Prime Now, which offers one-hour delivery for select items.
Of course, the steady stream of convenient perks isn't motivated entirely by altruism.
"Amazon has come up with this ingenious mechanism by which it's charging consumers to become more consistent customers," Mr. Hamrick says.
Where typically stores and brands would have to provide customers with benefits or premiums to convert them into best customers, Amazon has inverted the process with Amazon Prime, which charges customers to become favored shoppers and access its premium benefits.
So, far the inversion seems to be working to Amazon’s benefit.
Amazon chief executive Jeff Bezos called Amazon Prime membership one of the company's "three big pillars," the biggest contributors to the more than $100 billion in revenue the company made in 2015.
Prime membership grew by 51 percent last year, with 47 percent growth occurring in the US, according to Amazon's 2016 shareholder letter.
The growth is putting pressure on the existing retail industry.
"The expansion of same-day delivery ... is a major advantage over brick and mortar stores like Target and Walmart,” says Tuna Amobi, an analyst with S&P Global Market Intelligence. Although, he noted, "we’re seeing incremental improvements across the landscape from traditional retailers."
Retail giant Macy’s rolled out same-day delivery in 17 locations across the United States in August 2015 and is still continuing the service at some locations.
Other brick-and-mortar retailers have adopted creative approaches to combat Amazon's rise. Last year, Target introduced a price matching policy that included 29 of its rivals, including Wal-Mart and Amazon. Wal-Mart offered a similar policy during Black Friday 2014.
"There is a place for [brick-and-mortar stores], definitely," Mr. Amobi says, in reference to the future retail market. "All of these places can coexist."
The 11 new locations for Amazon same-day delivery are Charlotte and Raleigh, N.C.; Cincinnati; Fresno, Sacramento, and Stockton, Calif.; Louisville, Ky.; Milwaukee; Nashville, Tenn.; Richmond, Va.; and Tucson, Ariz.; plus new areas in central New Jersey, Dallas-Fort Worth, Los Angeles, and San Diego.
