Amazon Is Rolling Out Free 1-Day Delivery for Prime Members, Costing $800M in Investment
Amazon is already known for its speedy delivery options for consumers. Now, the online retail giant is about to get faster by switching its two-day delivery to one day for Prime members at no additional charge.
The announcement was made today during a Q1 earnings call by CFO Brian Olsavsky, who added that the program is already being tested in North America and will later be available worldwide.
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“We’re currently working on evolving our Prime shipping program, which has historically been a two-day program, to a one-day shipping program,” Olsavsky said. “We’ll be building most of this capacity through the year in 2019.”
Enacting the change comes at a high cost to meet the logistical needs — $800 million. Amazon’s transportation partners like USPS, UPS and FedEx will be included in the transition in addition to its own delivery service.“We’re already starting down this path,” Olsavsky said. “We’ve expanded the number of zip codes eligible for one-day shipping.”
The initiative will add value to the $119 annual Prime membership fee, of which more than 100 million customers enjoy perks like free access to its streaming TV and films, unlimited reading and exclusive deals, as well as same-day delivery for eligible zip codes. With one-day delivery positioned as the standard for Prime users, Olsavsky believes it can increase consumer spending.
“We think that will open up a lot of potential purchases and will open up convenience to those customers,” Olsavsky said.
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