A new report has revealed that Amazon can offer same-day and next-day delivery to 72 percent of the U.S. population, including almost all of the households (95 percent or more) in 16 of the wealthiest and most populated states and Washington, D.C.
Late last month Amazon announced that it plans to invest $800 million during Q2 to increase delivery speed for Prime members to one day from two. While one-day delivery is an option on some goods, according to Amazon Chief Financial Officer Brian Olsavsky, the goal is to shift the standard for Prime customers from the two-day shipping that has been the headline offering for Prime since day one to a single-day delivery norm.
“We have been offering, obviously, faster than two-day shipping for Prime members for years (one-day, same-day, even down to two-hour delivery for Prime Now), so we’re going to continue to offer same-day and Prime Now, morphing into — or evolving into — a free one-day offer,” he said, responding to an analyst question.
While one of the perks to shopping at a physical store is the ability to get the product right away, Amazon is now able to compete with that need for instant gratification. And as RBC Capital pointed out after the announcement: “the faster you ship, the more people buy,” according to CNBC.
In fact, Olsavsky revealed that Amazon has already begin to see “good order trends” after launching one-day default shipping in select locations. That’s good news considering the $800 million investment caused Amazon’s operating profit guidance for Q2 to fall between $2.6 billion and $3.6 billion, far below the $4.2 billion Street estimate.
Amazon’s move will also have an impact on its rivals. Not only did Walmart and Target see their shares fall following Amazon’s announcement, but they will now be forced to spend more in an attempt to compete with Amazon.
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