Amazon will spend $800 million this quarter to expand the availability of one-day e-commerce shipping.
The online retailer currently offers paid members of its Prime loyalty program free two-day shipping on most items they buy from Amazon, and its shoppers can get many items delivered faster than that through its Prime Now offerings—but officials in a conference call said the latest initiative is about “morphing” the standard two-day ships now offered into a free one-day offer.
“This is a significant step and it will take us time to achieve, and we want to ensure that we have good delivery experience for our customers as we evolve the software,” said Brian Olsavsky, Amazon’s CFO, during a conference call reviewing the retailer’s first-quarter financial results. “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.”
Though the announcement took rival retail stocks for a dip Friday, Walmart indicated it was also at work at speeding up delivery. “One-day free shipping...without a membership fee. Now THAT would be groundbreaking. Stay tuned,” a tweet from the retailer’s account read.
For the quarter that ended March 31, Amazon said sales increased by 17% to $59.7 billion. Its physical stores division, which consists almost entirely of Whole Foods Market stores, saw sales increase by 1% to to $4.3 billion. Olsavsky said in the conference call that the store sales do not include online orders or transactions fulfilled through stores. Including those figures, sales would have improved by about 6%, which he said indicates that Amazon’s practice of offering discounts for Prime shoppers and expanding free delivery for members is resonating.
“Prime members have adopted the Whole Foods benefit more than almost any other benefit we've offered them, and they're saving, as a result, hundreds of millions of dollars," he said. "We continue to expand the coverage for delivery. We have delivery into 75 U.S. metro areas through the Prime Now app, and we also have pickup in over 30 metros also through the Prime Now app.”