Amazon announced this morning it’s expanding its faster, same-day delivery service to half a dozen more U.S. cities. The service, which the retailer has been working to make same-day delivery even faster over the past year, now offers consumers in a number of markets the ability to shop up to 3 million items on Amazon.com, then receive their orders in only a few hours.
To do so, Amazon invested in what it called “mini-fulfillment centers” closer to where customers lived in select U.S. markets, initially in Philadelphia, Phoenix, Orlando and Dallas. Those customers could then shop across a dozen merchandise categories, including Baby, Beauty & Health, Kitchen & Dining, Electronics, Pet Supplies and more. As the pandemic continued to impact Amazon’s business, in November 2020, Amazon expanded its faster same-day service to more cities, to include Nashville and Washington, D.C.
With today’s expansion, Amazon is rolling out same-day delivery to Prime members in Baltimore, Chicago, Detroit, Tampa, Charlotte and Houston, bringing the total markets served to 12. In these markets, shoppers will be able to place orders online throughout the day, then have items on their doorstep in as fast as five hours, Amazon says. Customers can also place orders by midnight to have their orders arrive the following morning.
The service continues to be free, with no additional charges on orders over $35 that qualify for same-day delivery. Orders less than $35 have a $2.99 fee for Prime customers, and a $12.99 fee for nonmembers. Prime membership, meanwhile, is $12.99 per month, or $119 per year.
The time frame commitments for same-day delivery are the same as those Amazon promised last year when it first announced its plans to speed up Prime delivery. Orders placed between midnight and 8 AM will arrive by 1 PM. Orders placed between 8 AM and 1 PM arrive by 6 PM; those placed between 1 PM and 5 PM will arrive by 10 PM; and those placed between 5 PM and midnight will arrive overnight by 8 AM. That means customers can place orders fairly late and receive their items before they head out of the house the next day.
Faster same-day delivery has been one of the most significant services Amazon has used to challenge rivals like Walmart and Target, which both benefit from having a large brick-and-mortar footprint that allows them to more quickly serve their customers through same-day order pickup, curbside pickup and same-day delivery services. While Walmart partners with third-parties on its same-day service, Express delivery, largely focused on grocery, Target acquired delivery service Shipt in 2017 to bring its fast delivery services in-house.
In response to the growing competition, Amazon has been acquiring smaller warehouse space inside major urban metros, including in these six new markets where it’s now announcing same-day delivery, as well as larger markets, like New York, and even suburban neighborhoods. It also acquired Whole Foods for $137.7 billion in 2017, not only to more fully participate in the online grocery business, but also in part because of its large retail footprint.
As Amazon has sped up the pace of what’s available under “Prime” delivery, it has wound down its older “Prime Now” business, which is being retired August 30. The separate app had allowed customers to shop items that were available in one or two hours for an additional fee, if orders were less than $35.
The news follows Amazon’s earning miss last week, when the retailer fell short of Wall Street’s estimates for revenue, and gave a weaker than-expected outlook for the quarter ahead, which Amazon attributed to difficult comparisons with a time frame that included COVID lockdowns during the height of the pandemic in 2020. The company reported $113.08 billion in revenue and earnings of $15.12, versus expectations of $115.2 billion and $12.30.
Update, 8/4/21, 11 am pt to clarify Prime Now’s retirement was accelerated from year-end, as Amazon initially said, to Aug. 30 when its website and app will fully closed.