Amazon Commits Resources For Same-Day Delivery Boost To Drive Bottomline Growth

by Anusuya Lahiri, Benzinga Editor
February 27, 2023 7:54 AM | 2 min read |
  • Amazon.Com, Inc AMZN earmarked resources to facilities and services structured to deliver customer packages in less than a day.
  • Amazon’s expansion of ultrafast delivery options reflected competition for fast-delivery opportunities from Walmart Inc WMT and CEO Andy Jassy’s renewed focus on profits, the Wall Street Journal reports.
  • Amazon’s ultrafast delivery is possible with a strategy is its network of warehouses called same-day sites. The facilities are a fraction of the size of Amazon’s large fulfillment warehouses, the WSJ writes.
  • The larger Amazon warehouses rely on delivery stations closer to customers for the final shipping stage.
  • Amazon has opened about 45 of the smaller sites since 2019 and could expand to at least 150 centers in the next several years, according to the WSJ. 
  • The sites have primarily opened near large cities and deliver Amazon’s catalog’s most popular 100,000 items. 
  • New locations recently opened in Los Angeles, San Francisco, and Phoenix, according to Amazon.
  • Analysts say Amazon’s service can help the company retain users of its $139-a-year Amazon Prime subscription, which provides streaming, discounts at Whole Foods Market, and other perks.
  • Amazon’s fast-shipping service can add fees for small orders. “Last mile” costs to deliver items from the locations can cost $3.30 a package, compared with $1.75 for packages at its traditional fulfillment sites, according to MWPVL. 
  • Using same-day sites can eliminate other costs that apply to the company’s standard fulfillment system.
  • “They need volume to make it work,” said Marc Wulfraat, president of MWPVL.
  • Amazon reported fourth-quarter net sales of $149.2 billion, up 9% year-over-year. The total came in ahead of a Street estimate of $145.45 billion.
  • The company reported fourth-quarter earnings per share of 3 cents, which came in shy of a Street estimate of 17 cents.
  • Price Action: AMZN shares traded higher by 0.73% at $94.18 premarket on the last check Monday.
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