Amazon rolls out free same-day delivery
Amazon on Thursday began offering free same-day shipping on "over a million" items to Prime subscribers in 14 major metropolitan areas.
The order size for Prime Free Same-Day Delivery has to be over $35. Delivery on orders under $35 costs $5.99 for Prime members, and starts at $9.98 for non-members. The order also has to be made by noon with the promise of a delivery by 9 p.m.
The products available include books, staplers, headphones and video games and come in addition to the "tens of millions of items" available to Prime members for two-day free delivery.
Eligible products will be designated on Amazon.com with a Prime Free Same-Day logo on the product page. Customers can check a Prime Free Same-Day to filter items eligible for the service while conducting searches on the site.
The 14 markets in the launch are: Atlanta, Baltimore, Boston, Dallas/Fort Worth, Indianapolis, Los Angeles, New York, Philadelphia, Phoenix, San Diego, San Francisco, Seattle/Tacoma, Tampa and Washington, D.C.
Source: Amazon video
Free same-day delivery builds on December’s launch of Prime Now, which offers one-hour delivery on select items for $7.99 and free two-hour delivery. Prime Now, also exclusive to Prime members, is available in Atlanta, Austin, Baltimore, Brooklyn, Dallas, Miami and Manhattan.
Amazon also offers grocery deliveries in New York City, Seattle, Philadelphia and parts of California under the AmazonFresh brand.
Amazon has been aggressively adding warehouses, improving warehousing technologies and experimenting with delivery methods to meet its ambition to control "the last mile" of a package’s journey to consumers’ doorsteps. Prime Now, for example, uses bike couriers, who recently have been also utilizing New York City’s subway system to fill orders.
Free same-day delivery and Prime Now both support Amazon’s $99-per-year Prime membership program, which is seen as a critical loyalty driver. The service also pushes further to remove the "instant gratification" that buying an item at a physical stores has long held versus waiting for an online delivery to arrive.
Reports noted that the move is also partly defensive, given that Google, Walmart and eBay are all testing same-day delivery. The Wall Street Journal noted that startups such as Uber, Lyft, Deliv and Postmates that pick up products from local stores for cheap delivery also present challenges for Amazon.
- Amazon Free Same-Day Delivery – Amazon
- Order with Prime FREE Same-Day Delivery – Amazon
- Amazon rolls out free same-day delivery for Prime members – The Seattle Times (tiered sub.)
- Amazon Aims for Fast, Free Delivery – The Wall Street Journal (sub. required)
- Amazon Prime, now with free, same-day deliveries – CNET
- Prime Now Gets Even Better: One-Hour Delivery from Your Favorite Local Stores – Amazon
- Amazon: Get it (almost) right now – RetailWire
Discussion Questions
Is extending free same-day delivery a game changer for Amazon and the retail industry? Do Amazon’s delivery options — free same-day delivery, Prime Now, AmazonFresh, etc. — complement each other? How do you see the battle for same-day delivery playing out?
Poll
BrainTrust
Nikki Baird
VP of Strategy, Aptos
When a company the size of Amazon moves to free same-day delivery it’s a game changer. Amazon now offers a full suite of delivery options in some markets, which throws down the gauntlet to competitors and to brick-and mortar-retailers. Why deal with the hassle of driving, finding a place to park, sales clerks who offer little assistance and check out lines when you can simply click? Your purchase will arrive that day. Amazon has been ahead of its competition for years. This is just the latest salvo in its winning strategy.
Given how much attention was paid to their rising shipping costs and investors’ apparent growing impatience when it comes to Amazon’s profitability, I’m not sure that I would call this a game changer. It’s definitely been a long time coming — retailers have been fretting about it for a couple of years now.
So I guess my answer is, it’s certainly not a shocker. My colleague Paula has been taking advantage of the Prime Now in Miami and loves it. But for a large percent of U.S. consumers, like me here in Denver, life is unchanged by this news. So we’ll just have to wait and see. It’s only a game-changer if it is sustainably affordable, and I haven’t seen any proof yet that it is.
GAME CHANGER — NO Question!
Free shipping was a big deal when it was unique. But many in the U.S. can now match free shipping with a multi-day window and minimum orders.
As an interesting sidebar, the expectation for major cities like Shanghai and Delhi is the expectation that free shipping should be in four hours or less. Multiple shipping options within hours of the order are rapidly becoming new standard for major cities worldwide. (Not so easy in rural China, India or the U.S.).
Free shipping the SAME day is a total differentiator in the U.S., completely unique for those major markets where it is offered. And it is a differentiator that will be difficult to replicate because it requires substantial infrastructure, systems and processes which are not easily created overnight.
While Bezos has been slammed on Wall Street for not making money in the short term, this launch of same-day delivery options is a clear sign of a long term strategic view that will change the game in many categories.
If there ever was a wake up call for brick-and-mortar, this should be it. If you can’t match free same-day delivery, your had better deliver over-the-top customer experience in your stores!
Does anyone else smell the sadness of desperation? First it was the race to have the lowest price. Now it’s the race to deliver goods the fastest. How can that possibly be a winning formula? And exactly who of reasonable mind is asking for any of this?
Both of those variables are finite — cost can go only so low and speed of delivery is limited by physics. In other words it’s a dead-end game. The winner loses.
Something has to give. In another RetailWire item today the topic is Amazon’s poor quality diapers so maybe quality of goods will be the weak link. Getting milk and cereal from Amazon … really? Is anyone there hunting through the milk to find a carton just slightly fresher for you? There’s no time for that.
This won’t make sense perhaps, but I can’t help but parallel this circumstance with the use of steroids in sports. In sports the goal is to be the strongest, fastest, etc., and steroids was the road chosen by many to accomplish that. The sad thing is that the purpose of the game was sacrificed. What we’re seeing here is retail looking to its version of “steroids” to win what some think is the game.
Yes, this is a game changer in the markets in which it is launched and those in which it will be launched going forward. Marrying all of their different approaches together definitely makes them more and more formidable. The real interesting part will be to see how fast they can grow the selection available for same-day delivery coupled with market expansion.
This will be another “gotta have it for Millennials” and then it will fade into the background. Many of the people using same-day are from the generation of “Gotta have it NOW” people. Most of that generation just goes to the store and gets what they need. The other segment of special needs shoppers want to use their computers or phones to do this. To them it is exciting and new and they LOVE having someone deliver something to their place or to them.
Let the noise and hype flow, it is just another exciting moment in the never ending attempts to make retail more than it really is.
Retailers — stick with the true Normcore areas and be the most successful.
A gold star for Ian Percy!
It all sounds lovely, like the game is over for direct competitors and mom and pops, but what are the margins? Before the infamous dotcom bubble burst, companies that weren’t spending $100-plus to acquire new consumers seemed like they didn’t understand the new landscape of the Internet.
Maybe Amazon can pull this off and have a sustainable same-day delivery service, but before too many people jump the gun and give them a pile of credit, lets let cooler heads prevail and see how this plays out.
Don’t think it’s a game changer since this service is not scalable and limited to major metropolitan areas catering to busy single/Millennial/not-price-sensitive consumers who want instant gratification. It’s also a way to justify the increasing Prime fees as an added “benefit.” It would be interesting to see how many Amazon Prime members use the same-day delivery and AmazonFresh in the long run, but I doubt it will catch on.
Thank you Ian, as common sense will have to enter the equation. I don’t care how big Amazon gets, as it still costs money and time (which is also expensive) to deliver these “free” goods. Sorry, but I have been around too long and know that a profit must be built into this somewhere, and I will continue to offer super hot deals and run my business like I know how to do, and amazingly I will probably be around for many more years.
InstaCart, which has had some success, is not inexpensive to deal with but it does serve a purpose for consumers willing to pay for the convenience, and I’m all for that.
You cannot have the best price and have same-day free delivery and make a profit, as there are many competitors and sharp brick-and-mortar stores that will not sit idly by and watch this happen without reacting.
I totally respect Amazon for the things they do, but something has to give with some higher pricing or it won’t work, especially for the shareholders. Hey I could be wrong, but profit is not a dirty word, so let’s see how this goes. By the way, it is much easier to cherry pick metropolitan areas to do this, but the other 80 percent of the population will be left to coming to stores like mine, and we’ll continue to serve them quite well. Enjoy the weekend everyone.
It’s a game changer if Amazon can find a way to make this endeavor profitable. Otherwise it’s another example of squeezing out some margin in this thin-margin business. On Prime’s many favors: It’s getting a bit confusing as they extend the Prime brand. Big fan, and all of these add-ons are interesting, but I’d like to see some data on how the consumer is reacting to all the variations.
All purchases can be divided into one of two groups: 1. Surprise/Delight/NOW! and 2. Routine/Autopilot/Angst. The first is virtually owned by bricks retailers, although some surprise/delight might be delivered, mostly in an inferior way, by online. Heck, most bricks retailers deliver it in an inferior way.
But NOW!, immediacy of delivery, is the reason that more people buy only ONE item from any store in the world! And that includes super centers. The reason people buy only one item, more often than any other number, is because they need it RIGHT NOW! (Within minutes or hours they forget that they ever made this shopping trip—and retailers despise these trips because they are after the big baskets.
Despise? Not actively, but passively by making no efforts to address the massive need and opportunity represented here. Don’t think so? How did supermarkets respond to the growth of the C-store industry over decades? Oh, right, never do anything really significant in the store, but start building their OWN C-stores in the corner of the parking lot. Good grief!
And late in online coming to eat bricks lunch, online is getting to “same day” delivery. Obviously this is a huge threat. But bricks retailers will crouch in the corner and whimper while they themselves hold the trump card of immediacy, “IMMEDIATE” delivery, right NOW! But this is merchant-warehouseman behavior. Do what has been done in your industry—very successfully—for 100 years. Thank you for your tremendous service over those hundred years, but a few of your competitors will get a clue, even if you don’t. They will be the survivors/thrivers.
I believe this provides a significant point of difference for Amazon. This is the latest move in Amazon’s robust order fulfillment strategies. It’s about making interactions seamless, efficient and effective.
Amazon’s model is based on the following:
The same day delivery addresses each of these customer needs with an emphasis on making the shopping experience as painless as possible.
The claim of immediate gratification by traditional retailers will be obviated by same day delivery.
Game on!
Merchants of all varieties will have to devise their own strategies to overcome two big obstacles: managing inventory to enable delivery on demand, and managing same-day delivery costs. To manage inventory effectively, data from the organization needs to be shared across all departments to avoid missteps, unfilled orders and unhappy customers.
Same-day delivery has an associated cost that some retailers may be able to subsidize, but many may pass the cost along to their consumers who are not quite willing to pay it. A recent study from LoyaltyOne of U.S. consumers indicated that younger generations were more likely to agree same day delivery is worth the extra fee, and men were more likely to pay an extra fee than women. Forty-four percent of those surveyed stated that sometimes they would consider paying a fee, indicating that consumer attitudes are evolving.
Driven by data analysis and technology, same-day delivery will likely progress to the point that the consumer believes it is a necessity. By then, the cost will come down, at least for the fittest of the herd.
No. Getting products the same day is not going to move purchases as much as one hour delivery. Of course the real truth will be during the holiday season and Sundays. Perhaps all of this will depend on how these retailers can make money under this model (or will they continue to lose money like Amazon)?
Amazon has always been and still is a game-changer. Why would I even walk across the street to Target when I can order from Amazon and just have something delivered within a nearly flawless customer experience?
While Amazon won’t win in all categories, depending on what business you’re in as a retailer, it’s best to pay extremely close attention and make sure you are as customer-focused as Mr. Bezos and company are.
We’re fortunate in Atlanta to have the same day service and it’s quite remarkable.
There’s little that Amazon does that isn’t a game changer. With every new development they introduce, they successfully improve their market share and give competitors a run for their money.
Just like the race to the bottom for product pricing, having free same day delivery doesn’t seem sustainable. But if any company could make this work, it’s Amazon, since they have the resources to sustain losses.
First, Amazon has been and will continue to be a game changer in the retail industry. How will this impact prices? Someone has to pay for that level of service.
I like the “battle” for same-day service. Competition will allow the best service and pricing rise to the top, and that’s a win for the consumer.
How far can a “disruptive” business model expand before it begins to look like the legacy model it originally sought to disturb?
The case for shopping online was made on selection, control, privacy and pricing. The in-store experience was missing of course, as was that ability to take an item home with you from the store.
Adding more speedy shipping alternatives makes sense to a degree, but how far can Amazon expand to control the delivery value chain before it burdens itself with physical assets (warehouses) and human resources (delivery people) before its cost base erodes any pricing advantage it had over brick and mortar retailers?
This has the feel of coffee shops expanding menus to add more and more items to cover additional day parts and fend off competitors until their original brand identity is lost. There is risk here for Amazon on multiple levels.
Maybe the invevitable is for Google, Amazon, etc. to merge or acquire FedEx or UPS. That might be a path to longer term success.