Amazon Continues to Expand Same-Day Delivery Services
April 15, 2022
In March 2022, Amazon announced the latest expansion of their “mini-fulfillment centers” to Boston, which allow for same-day delivery to Prime customers within the Greater Boston Area. This service is now available in 27 cities across the country. Same-day delivery allow orders to arrive within hours of purchase. Orders placed as late as midnight arrive at the customer’s doorstep by the next morning. Prime members qualify for free same-day delivery on purchases over $35, or $2.99 for delivery on orders under $35; non-Prime members pay a flat fee of $9.99 per order. Expansion of mini fulfillment centers poises Amazon for further domination not only in e-commerce, but in retail generally, as same-day delivery becomes a viable alternative to brick-and-mortar stores.
Mini-fulfillment centers are one-tenth of the size of traditional fulfillment centers, use robotics for processing orders at the warehouse, and carry up to 3 million “need it today” items across a dozen categories like baby, beauty and health, kitchen and dining, electronics, and pet supplies.
First announced in 2020, Amazon’s same-day delivery is the latest progression in their strategy to reduce delivery time and expand their transportation infrastructure across the country. In 2018, 51% of the U.S. population was within a 60-minute drive of an Amazon delivery station. By the end of 2021, coverage for Americans living within an hour of their delivery centers increased to 77%. Amazon looks to close the gap on Walmart and Target, who had a head-start with brick-and-mortar infrastructure and currently have store networks that can reach 99% and 94% of the U.S. within 60 minutes, respectively.
Jason Murray, former Vice President of Supply Chain and Retail Services at Amazon highlighted the importance of shipping speed in e-commerce, stating, “You can do whatever you want with marketing, check-out, one-click (ordering), whatever it is – speed is what drives everything.”
Although the high costs for developing same-day delivery infrastructure have caused a dip in Amazon’s revenue in recent years, Amazon’s additional facilities are expected to increase capacity for faster and less-expensive delivery in the long term, ultimately leading to sustained growth. Additionally, Amazon touts that widening their delivery infrastructure will significantly shrink their carbon footprint by reducing transportation costs, allowing the company to achieve net-zero carbon by 2040.
It is yet to be seen whether same-day delivery will expand to further product categories. However, given their trend in continually reducing delivery times, same-day delivery as the norm for the entire population across numerous product categories would be no surprise. Same-day delivery highlights Amazon’s potential to expand their market and compete with traditional brick-and-mortar retailers.