Products appear at an Amazon fulfillment center where they are sorted and shipped as same-day orders during Cyber Monday at the Same-Day Delivery Facility Fulfillment Center in Tampa, Florida on November 27, 2023.
Octavio Jones | News Getty Images | Getty Images
Amazon says it gets even more packages to customers in a day or sooner, a metric that boosts the e-retailer’s customers as it faces intense online shopping competition.
The company said Monday that nearly 60 percent of orders placed through Prime in the top 60 U.S. metro areas in the first quarter arrived the same or next day. That’s up from about 50% in the second quarter of 2023.
It’s a topic that will be of considerable interest to investors when Amazon reports first-quarter earnings after the close of trading on Tuesday. Wall Street expects the company to post another quarter of double-digit revenue growth and profits to more than double from a year ago.
Cost-cutting efforts, demand for cloud computing and faster fulfillment have led to higher profits in recent quarters.
Fast delivery is a feature of Amazon’s Prime subscription offering, which charges members $139 a year for benefits like two-day shipping and video streaming. The company has said it wants to make same-day and next-day delivery the standard and plans to double the number of same-day delivery facilities in the US over the next few years.
“Because we get items to our customers so quickly, customers are choosing Amazon to fulfill their shopping needs more often,” said CEO Andy Jassy. he wrote in his letter to shareholders earlier this month. “And we can see the results in a number of areas, including how fast our daily commodities business is growing (over 20% year-over-year in Q4 2023).”
According to data from RBC Capital Markets, consumers have been shown to spend and shop more often if they have same-day shipping.
Amazon’s physical footprint swelled between 2020 and 2022 as the pandemic-induced e-commerce boom prompted the company to rapidly add new warehouses and delivery centers to its logistics network. Amazon last year revamped that network to eight regions instead of a national model, which the company says has resulted in faster but also cheaper deliveries. Jassy in the shareholder letter noted that cost to serve, or the cost to deliver a product to a buyer, fell in 2023 by more than 45 cents per unit year over year.
Amazon already has more than 55 same-day delivery locations in the U.S., mostly clustered around major metro areas. The facilities are about 100,000 square feet, compared to a typical Amazon warehouse, which can be the size of 26 football fields, and stock a smaller selection of goods that are the best-selling items in each city.
Same-day sites also condense the fulfillment process, which is typically spread across multiple Amazon facilities under one roof. A package makes fewer stops on its way to the buyer’s doorstep, which lowers the cost per shipment.
Amazon has stepped up investment in fast shipping as traditional retail competitors Walmart and Target they have stepped up their delivery game. Walmart says it can deliver items to shoppers in as little as 30 minutes, while Target in March launched a new loyalty program that offers same-day delivery on orders over $35 in just one hour.