Follow that: Amazon plans free one day delivery for prime customers
Amazon has promised to cut delivery times worldwide for customers of its Prime service. Amazon Prime is a subscription service offering free delivery and access to Amazon’s TV shows.
Members in the US currently receive free two-day delivery, but the plan is to cut that to one day. Prime customers already get free one-day delivery in some parts of the UK. Amazon plans to spend $800m (£620m) to cut delivery times elsewhere.
It did not say when delivery times would be cut but said it expects to make “steady progress” this year.
Walmart and Target have been improving their delivery times in the US and offer two-day shipping on many items. Amazon’s move is an effort to stay ahead of those rivals.
It already ships many items to US cities within a day, but analysts say extended that service to more remote parts of the country will be difficult.
“Amazon is cranking it up a notch, trying to set themselves apart,” said Cathy Morrow Roberson, a former UPS analyst who founded consulting firm Logistics Trends & Insights.
“I don’t know how they are going to do it in Little Town USA,” she said.
Amazon also reported a first quarter profit of $3.6bn (£2.8bn), double the same period in the previous year. It was its fourth successive quarter of record profit.
In the first quarter sales rose 17% to $59.7bn. Amazon expects sales to grow between 13% and 20% in the second quarter.
Sales surged at Amazon Web Services (AWS), which provides computing services to companies over the internet – a service know as cloud computing.
Launched in 2002, AWS has become a crucial part of Amazon’s business, and sales rose 41% to $7.7bn in the three-month period to the end of March.
“While the cost of building the data-driven infrastructure to support the cloud systems is vast, the fact it requires such deep pockets actually works in Amazon’s favour,” said George Salmon, an analyst at stockbroker Hargreaves Lansdown.
“It’s difficult to see how a new challenger can wrestle business away from the likes of Amazon, Google, and the latest member of the $1tn club, Microsoft.”
Microsoft has seen its stock market value top $1tn after reporting better-than-expected sales and profits.