Amazon is morphing Prime from a two-day free shipping program to a one-day free shipping program, the company said Thursday, upping the ante for retailers trying to keep up with the e-commerce giant. Amazon plans to spend around $800 million in Q2 in the effort, CFO Brian Olsavsky said during Thursday’s Q1 earnings conference call.
“We’re able to do this because we spent 20-plus years expanding our fulfillment and logistics network, but this is still a big investment and a lot of work to do ahead of us,” Olsavsky said.
Amazon tops Q1 earnings expectations as AWS keeps up brisk growth
Free two-day shipping is one of the key benefits of the Prime subscription program, which also offers customers access to services like Prime Video, Prime Music, Prime Pantry and Prime Now. Prime members can already get one-day shipping in some cases, as well as one- to two-hour delivery for Prime Now.
“But this is all about the core free two-day offer morphing into or evolving into a free one-day offer,” Olsavsky said. “We’ve already started down this path. We’ve, in the past months, significantly expanded our one-day eligible selection and also expanded the number of ZIP Codes eligible for 1-day shipping. So we’re taking a significant steps.”
As Amazon rolls out the program, it will need to make changes to its supply chain, and it will depend on the external support of transportation partners like the US Postal Service, Olsavsky said.
“We’re going to be using all of the available leverage we have,” he said.
Amazon saw more people sign up for Prime in 2018 than any other year before, Olsavsky said. Additionally, engagement — measured by metrics such as shipping, hours watched on video and hours listened to on music — “are trending in the right direction and continue to get more and more sticky.”
Evolving the program to one-day free shipping “will open up a lot of potential purchases,” Olsavsky added, making Prime “even more ‘the best deal in retail,’ as we say.”
Related Topics:
Amazon
Start-Ups
Innovation
Security