Amazon Has a Need For (Delivery) Speed

One-Day Delivery

Amazon Prime (AMZN) was launched in 2005 with the promise of unlimited two-day delivery for its members. At the time, this delivery speed was revolutionary and set the bar for other retailers.

Almost two decades later, Amazon is working to raise the bar again. It’s new goal: making single-day delivery the norm for all Prime members. And it might not be as far off as it sounds. In 2023 so far, the ecommerce giant delivered 1.8 billion units same- or next-day — roughly four times 2019 levels.

To make this ultra-fast shipping a reality, Amazon invested heavily to overhaul its delivery network, revamping its traditional hub-and-spoke model to better leverage “same-day fulfillment” sites spread across the US.

Same-Day Shipping

While Amazon’s hub-and-spoke delivery model has been historically effective, it also consists of notable inefficiencies. Many packages still must travel through multiple fulfillment centers to reach their final destination.

Under the new model, Amazon is leaning on “same-day delivery sites” to reduce these inefficiencies. These sites are located close to Amazon’s busiest areas, typically big cities. They enable the company to fulfill, sort, and deliver millions of products from a single location.

These sites are also smaller than traditional warehouses. Instead of holding all of Amazon’s products, they are only stocked with the most commonly-purchased products in each region.

Saving Money and Time

On top of the logistical challenges, same- or next-day shipping is notoriously pricey.

Despite the extensive investment, Amazon’s new delivery system actually cut costs for the ecommerce giant, according to Amazon’s VP of Transportation. With this improved delivery network, Amazon may be able to compete even more closely with major retailers on both convenience and affordability.

With the company planning to build even more same-day delivery sites, waiting two days for your package could soon become a thing of the past — assuming this lofty goal is a promise it can deliver on.

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