Over the past two decades, Amazon has become the world’s biggest online retailer, and the biggest reason behind its ascent lies in the fact that the company has continuously offered new features to its customers in order to stay. In a new development, Amazon Prime has possibly been one of the company’s biggest innovations in the e-commerce space and in new development; the company has now piled further pressure on its competitors by announcing that it plans to deliver packages in a day to its Prime members.
However, it is even more significant that Amazon went on to state that it is a service that it is going to introduce globally and not only as a pilot project in select locations. Needless to say, this is another move from the company that is going to catch its competitors unaware, and it was not surprising when the company’s stock rose by 2% in the after-hours trade yesterday. Over the years, Amazon has poured money into making the customer experience as good as it possibly can be and after reporting bumper profits in the first quarter this year, the company now plans to pass much of that into this new service.
In the first quarter of 2019, Amazon recorded total profits of $3.6 billion despite the fact that its revenue growth had slowed down a bit. The company is planning to spend around $800 million in this venture that should lead to an explosion in Prime memberships in the immediate future. At a conference call with analysts, Brian Olsavsky, the CFO of Amazon, said, “There’s a lot of error bars around this programme, especially from the cost side. We (are) again, trying to take advantage of the fulfilment capacity and transportation capacity, especially with third-party partners that we have.” While it is true that it is a new challenge for the company, it is also a service that could leave its rivals in the dust for the time being. The same day delivery service is particularly important for Amazon’s grocery business, but once the service goes live, it will lead to a spike in order from across all product categories. Some of Amazon’s biggest rivals like Target and Walmart currently provide two-day deliveries, but they offer that service on select items. Amazon is 100% product neutral when it comes to this service, and it is believed that it will take some time before the rivals catch up.