Amazon

Is Prime Slowing Amazon’s Shipping Model?

Amazon Prime is clearly a staple service for the eCommerce giant and its newly coveted profits that the company has been able to produce for the past few quarters.

And if you’re an Amazon Prime member, shipping is fast. The two-day shipping is free and often comes quicker than that two-day promise. Amazon has also started putting much more weight into its same-day shipping and even one- and two-hour shipping for its coveted Prime members.

But for the rest of Amazon’s customers? Shipping might not be quite as quick as it once was. For those customers, data shows shipping has gotten slower.

“For a long time, Amazon has been the leader when it comes to fulfillment,” said Kevon Hills, VP of research for StellaService, according to Forbes. “There are 40 companies on our list, and Amazon has always been in the top 10. This year, we’ve seen them fall outside of the top 10, which is the first time we’ve seen that happen.”

So, what does he attribute that to? Well, paying a little bit more attention (and perhaps logistics dollars) into making sure customers that spend more get their packages first.

That’s largely due to the company’s focus on delivery for Prime members, Hills says. “They’re really blowing that program out,” Hills said. “But where we’ve seen a slowdown for them is packages [delivered] within four days, year over year and compared to the industry.”

Of course, across the eCommerce and retail industry in general, there’s been a bigger push to get packages to customers cheaper and faster. As research has shown, that’s what consumers expect today, and they expect those two qualities to be offered when ordering online.

“Three years ago, if you delivered a package in four days, that was worthy of a top 10 consideration,” Hills said. “Now, if you deliver a package in four days, that puts you at 20. The industry is getting faster, and we’ve seen Amazon fall off a little bit.”

But the rest of the industry speeding up doesn’t necessarily mean Amazon is slowing down. But it seems, at least from this data, outside its Prime members, Amazon isn’t as fast as it used to be. Or, at least, isn’t the leader in fast shipping anymore.

“I think the focus, for them, has shifted from standard shipping to being fast and making sure they deliver on that promise for Prime,” Hills concluded.

Soon, however, this may all be a moot point for Amazon since it’s reportedly working on building its own logistics network.

New documents in a securities filing show that Amazon has given an even bigger hint at just what those plans will entail. According to those documents, Amazon is looking to build “companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline.” The documents also hint that Amazon wants to classify the business as a “transportation services provider.” But that’s not necessarily saying that Amazon wants to replace its current partners; instead, it could mean that Amazon wants to build out its own logistics service to supplement where its outside relationships may not be paying off.

Amazon did not provide any formal response to the filing. It’s no secret, however, that Amazon was building this network. Amazon has already used its own trucks to move goods out of its warehouses and has worked to build up its logistics services in order to combat rising shipping costs through having its packages delivered through a third party. There’s also been talk about Amazon turning its logistics operation into a shipping option for other retailers.

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