Amazon tests new delivery option for Prime members
Amazon is slow-walking a new delivery option for Prime members — Amazon Day. Using the service, shoppers can specify a day when their packages are delivered, CNET first reported. Shoppers can have all their orders from a given week shipped on a certain day, for example, according to the report.
The program is now accessible by invitation only, according to the report. Amazon declined to comment to Retail Dive about the service.
Cutting down on porch theft and helping the environment are two ways customers benefit from consolidating orders that way, CNET reported, but the biggest payoff would be to Amazon, which continues to spend billions of dollars on fulfillment.
Amazon has quickly grown its prime membership base to 100 million (mostly U.S.) shoppers, largely by enticing them with free two-day shipping on many items. Yet, the e-commerce giant continues to grapple with steep fulfillment costs.
Even as it has grown its marketplace's share of sales (now at 53%, according to Amazon's third quarter report), thereby shifting even more of the fulfillment cost and inventory risk onto its third-party sellers, the company's shipping costs last year reached almost $22 billion. About $7.4 billion were notched in the holiday quarter. In the last 12 months through the third quarter, the company’s outlay was roughly $26 billion, according to Moody’s Investors Service.
After setting consumer expectations for swift, low-cost (even free) shipping, Amazon is now facing competition from legacy retailers, which have made a concerted effort to bump online sales. Target, Walmart, Nordstrom and others have found ways to offer free shipping and returns to at least some customers, especially at the holidays. For the first time Amazon is offering free shipping to non-Prime members with no minimum, a move widely seen as forced by the competition. Late October, Target announced free two-day shipping with no minimum purchase or membership required for the holidays.
"Amazon's announcement ... that it was escalating the shipping 'arms race' by offering free shipping for everyone, not just its Prime members, for a limited, but undisclosed, time this holiday season is yet another example of the steps retail 'heavyweights' such as Amazon, Walmart, Target, etc. will take to continue to expand market share, and they will use every weapon in their arsenal to accomplish this," Moody's Investors Service Lead Retail Analyst Charlie O'Shea said in comments emailed to Retail Dive, adding that it's "certainly popular among consumers, however, it is a very costly initiative to undertake."
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